United States v. Coplan

Judge KEARSE dissents in part in a separate opinion.

We consider here the fate of four partners and employees of Ernst & Young, LLP (“E & Y”), one of the largest accounting firms in the world, who appeal their convictions in connection with the development and defense of five “tax shelters” that were sold or implemented by E & Y between 1999 and 2001. At issue, among other things, is the scope of criminal liability in a conspiracy to defraud the United States under 18 U.S.C. § 371 and the sufficiency of the evidence with respect to the criminal intent of certain defendants.

The defendants in these consolidated actions are three tax attorneys, Robert Co-plan, Martin Nissenbaum, and Richard Shapiro, and one accountant, Brian Vaughn, formerly employed by E & Y. A fifth defendant, Charles Bolton, was an investment advisor who owned and operated various asset-management companies.1 *54Coplan, Nissenbaum, Shapiro, and Vaughn (jointly, the “trial defendants”) appeal from separate judgments of conviction entered by the United States District Court for the Southern District of New York (Sidney H. Stein, Judge), on February 17, 2010, following a 10-week jury trial on charges of conspiracy to defraud the Government, tax evasion, obstruction of the Internal Revenue Service (“IRS”), and false statements to the IRS. Bolton appeals from a judgment of conviction entered by the District Court on April 14, 2010, following his plea of guilty to a single conspiracy charge.2

For the reasons that follow, we reverse the convictions of Shapiro and Nissenbaum on Counts One, Two, and Three, and the conviction of Nissenbaum on Count Four, and we affirm the convictions of Coplan and Vaughn in their entirety. We affirm the District Court’s order sentencing Bolton principally to 15 months of imprisonment, but we vacate and remand the portion of the judgment that imposed a fine of $3 million.

BACKGROUND

The evidence underlying the convictions, viewed “in the light most favorable to the prosecution,” Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979), established the following facts.

I. Facts

In 1998, E & Y formed a new group tasked with designing tax strategies, or “tax shelters,”3 to market to “high net worth” individuals who were seeking to shelter at least $20 million from income tax liability. Originally called the “VIPER” Group (for “Value Ideas Produce Extraordinary Results”), the group was renamed “SISG” (for “Strategic Individual Solutions Group”) in 2000. Coplan, Nis-senbaum, Shapiro, and Vaughn were the core members of the VIPER Group/SISG. The facts of this case principally relate to the design, implementation, and audit defense of four tax shelters developed by the VIPER Group/SISG: the (1) Contingent Deferred Swap (“CDS”); (2) Currency Options Bring Reward Alternatives (“COBRA”); (3) CDS Add-On (“Add-On”); and (4) Personal Investment Corporation (“PICO”) shelters. Coplan, Nissenbaum, and Shapiro also personally invested in a fifth tax shelter, known as the “E & Y 11 Transaction” or “Tradehill,” which was not marketed to E & Y clients. Although the IRS audited all five tax shelters, only the Add-On shelter was later subject to tax evasion charges. With respect to the other four tax shelters, the charged conduct principally relates to alleged false or misleading statements made by the defendants in connection with the IRS audits, as demonstrated by the defendants’ internal correspondence, deposition testimony, and written submissions to the IRS.

Since the details of the tax shelters and the supporting tax law are largely irrelevant on appeal, we briefly summarize the (necessarily oversimplified) operation of these transactions as follows.

*55A.The CDS Shelter

The CDS shelter was a tax “deferral and conversion” strategy that allowed a taxpayer to convert ordinary income into long-term capital gains and defer tax liability to the year after the income was earned. The taxpayer would form a securities trading partnership in which the taxpayer served as limited partner and another entity served as general partner. The partnership would then engage in a large volume of short-term trading and invest in an 18-month swap transaction. Because of the “trader” status of the partnership, swap payments made by the partnership were deducted as business expenses. If the swap was terminated early (ie., before maturity), but after 12 months, the payments received by the partnership were taxed at the (significantly lower) capital gains rate rather than the ordinary income rate. Treatment of these payments as capital gains depended upon the “early termination” of the swap, which allowed the payment to be characterized as a “termination payment” under the applicable regulations.

B.The COBRA Shelter

The COBRA shelter was a tax “elimination” strategy that involved creating an asset with a high “basis” for tax purposes, which the taxpayer could then sell and generate a deductible loss. The taxpayer would create a limited liability company (“LLC”) that would purchase a pair of offsetting “digital”4 foreign currency options that involved a bet on how a particular foreign currency would perform against the U.S. dollar in 30 days. Prior to the maturity of the options, the taxpayer would contribute the option contracts to an investment partnership. After the options expired, the investment partnership was liquidated and the taxpayer’s interest in the partnership was transferred to a Sub-chapter S corporation (“S corporation”),5 which would sell the assets and realize a deductible tax loss.

C.The Add-On Shelter

The Add-On shelter was a tax strategy marketed as a means to defer indefinitely income tax liability on capital gains, including the capital gains generated in the second year of the CDS strategy. Like COBRA, Add-On involved the purchase of offsetting digital option pairs, followed by a series of transactions designed to generate a tax loss. The offsetting options were structured so that there was a “one-pip” gap6 between their strike prices, so that, in a theoretical “home run” scenario, a taxpayer could make a multimillion dollar profit. Unlike CDS and COBRA, however, there was no reasonable possibility of earning a profit from Add-On apart from the “home run” scenario, since the Add-On fee structure required payments to E & Y and the entity acting as general partner that exceeded the potential payoff. As a *56result, Add-On was the sole tax shelter developed by the defendants that was subject to substantive tax evasion charges.7

D. The PICO Shelter

The PICO shelter was a tax deferral and conversion strategy that involved an investmént in an S corporation with another shareholder. The taxpayer would purchase 20% of the stock of the S corporation, while another person associated with the Bricolage investment firm (which helped to implement the transaction) would purchase the remaining 80% interest. The S corporation (also known as the Personal Investment Corporation, or “PICO”) would then purchase so-called “straddles,” financial instruments that generated offsetting gains and losses on foreign currencies, interest rates, or commodities. After building up a sufficient inventory of “losing” bets, the PICO would buy out the 80% shareholder. Under a tax regulation, the 80% shareholder would be allocated his share of the gains recognized by the PICO up to the time of redemption, and all the gains and losses recognized thereafter (i.e., most of the losses) would be allocated to the taxpayer. After contributing additional assets to the PICO, the taxpayer could then take the desired deduction.

E. The Tradehill Shelter

Unlike the other four tax shelters, the Tradehill shelter was marketed only to E & Y partners. After E & Y sold the consulting arm of its business to a French company called Cap Gemini in 2000, each E & Y partner received an allocation of Cap Gemini stock. Eleven E & Y partners participated in Tradehill, which was designed to eliminate the tax due on the income they recognized from the Cap Gemini transaction. Like COBRA and Add-On, Tradehill involved the formation of numerous corporate entities and the contribution of option pairs from one entity to another.

We note that similar tax shelters were marketed and sold by other major accounting firms and law firms as part of a lucrative “tax avoidance” practice that flourished in the late 1990s.8 See generally The Role of Professional Firms in the U.S. Tax Shelter Industry, S.Rep. No. 109-54, at 3 (2005). In February 2000, the IRS created the Office of Tax Shelter Analysis and subsequently issued a series of notices directed at “abusive” tax shelters.9 An April 2005 report issued by the Permanent Subcommittee on Investigations of the Senate Committee on Homeland Security and Governmental Affairs stated that “[ujnder current law, no single standard defines an abusive tax shelter.” Id. The report further noted that “[o]ver the past 10 years, Federal statutes and regulations prohibiting illegal tax shelters have undergone repeated revision to clarify and *57strengthen them.” Id. Although this case does not require us to comment on the substance of those revisions, we think it useful to acknowledge that the law with respect to tax shelters has evolved since E & Y formed the VIPER Group in 1998.

II. Procedural History

A federal grand jury returned a sealed indictment on May 22, 2007, and a superseding indictment on February 19, 2008, charging the defendants in thirteen counts with a wide-ranging conspiracy to defraud the United States through the development, sale, and implementation of the E & Y tax shelters. The superseding indictment was redacted to seven counts (the “Redacted Indictment”) for the trial of Coplan, Nissenbaum, Shapiro, and Vaughn.10

Count One of the Redacted Indictment charged each trial defendant with a conspiracy, in violation of 18 U.S.C. § 371,11 with three objectives: (1) to defraud the United States by impairing the lawful governmental functions of the IRS (known as a “Klein conspiracy,” see United States v. Klein, 247 F.2d 908, 915 (2d Cir.1957)); (2) to commit tax evasion in connection with the Add-On tax shelter, in violation of 26 U.S.C. § 7201;12 and (3) to make false statements to the IRS, in violation of 18 U.S.C. § 1001.13

Counts Two and Three charged each trial defendant with tax evasion, in violation of 26 U.S.C. § 7201, in connection with the Add-On tax shelter.

Counts Four and Five charged Nissenb-aum and Coplan, respectively, with obstructing the IRS, in violation of 26 U.S.C. § 7212.14

Counts Six and Seven charged Vaughn and Coplan, respectively, with making false statements to the IRS, in violation of 18 U.S.C. § 1001.

Trial commenced on March 3, 2009, with the beginning of jury selection. At trial, *58the Government sought to demonstrate that the defendants conspired to conceal the true nature of the five tax shelters by creating a variety of “cover stories” regarding the purported business purpose of the shelters, when in fact the shelters were motivated solely by a desire to avoid taxes.15 In essence, the Government sought to demonstrate that the defendants hid the truth from the IRS by withholding information and making affirmative misstatements. On May 7, 2009, the jury returned a general verdict of guilty on all counts. On January 21 and 22, 2010, the District Court sentenced the trial defendants principally as follows: Coplan was sentenced to 36 months of imprisonment, three years of supervised release, and a $75,000 fine; Nissenbaum was sentenced to 30 months of imprisonment, three years of supervised release, and a $100,000 fine; Shapiro was sentenced to 28 months of imprisonment, two years of supervised release, and a $100,000 fine; and Vaughn was sentenced to 20 months of imprisonment and two years of supervised release. The judgments of conviction for the trial defendants were entered on January 28, 2010.

Prior to trial, on January 22, 2009, Bolton pleaded guilty to a Superseding Information charging him with a single count of conspiracy, in violation of 18 U.S.C. § 371, having three objectives: (1) to defraud the United States by impeding, impairing, defeating, and obstructing the lawful governmental functions of the IRS (the so-called “Klein conspiracy”); (2) to make false statements to the IRS, in violation of 18 U.S.C. § 1001; and (3) to corruptly obstruct and impede the administration of the internal revenue laws, in violation of 26 U.S.C. § 7212(a). On April 14, 2010, the District Court entered a judgment of conviction sentencing Bolton principally to 15 months of imprisonment and a $3 million fine.

The defendants have remained free on bail pending the resolution of this appeal.

DISCUSSION

The defendants raise no fewer than ten challenges to their respective convictions and sentences on appeal, which we briefly summarize as follows: (1) the Government’s Klein conspiracy theory was legally invalid, (2) there was insufficient evidence to support (a) the convictions of Shapiro and Nissenbaum on Count One, the conspiracy charge, (b) the convictions of Shapiro and Nissenbaum on Counts Two and Three, the tax evasion charges, and (c) Nissenbaum’s conviction on Count Four, the obstruction charge, (3) the District Court erred in finding that venue was proper for Count Six, which charged Vaughn with false statements to the IRS, (4) the District Court erred by admitting the testimony of alleged coconspirator Graham Taylor, a tax attorney who committed a variety of crimes involving tax shelters unrelated to this case, (5) the District Court erred in admitting the out-of-court statements of more than 20 alleged coconspirators, (6) the District Court erred in excluding portions of Coplan’s and Vaughn’s deposition transcripts, (7) the defendants were prejudiced by prosecutorial misconduct in the Government’s rebuttal summation, (8) the District Court erred in (a) declining to give a “theory of the defense” instruction, (b) instructing the jury on a conscious avoidance theory, and (c) instructing the jury that “economic substance” existed only if there was a “rea*59sonable possibility” of profit, (9) spillover prejudice infected Coplan’s and Vaughn’s remaining convictions, and (10) Bolton’s sentence was procedurally and substantively unreasonable.

I. Validity of the Government’s Klein Conspiracy Theory

The first issue on appeal concerns the legal validity of the Government’s Klein conspiracy theory under the “defraud clause” of 18 U.S.C. § 371.16 As previously noted, Count One of the Redacted Indictment charged Coplan, Nissenbaum, Shapiro, and Vaughn in a § 371 conspiracy with three objectives: (1) to defraud the United States (the Klein conspiracy), (2) to evade taxes, and (3) to make false statements to the IRS. The core objective argued by the Government at trial was the Klein conspiracy, and that conspiracy forms the primary focus of the defendants’ arguments on appeal.

A. The Origins of the Klein Conspiracy

Enacted in 1867, the original federal conspiracy statute was appended to “An Act to amend existing Laws relating to Internal Revenue and for other Purposes.” Abraham S. Goldstein, Conspiracy to Defraud the United States, 68 Yale L.J. 405, 418 (1959) (quoting Act of March 2, 1867, ch. 169, § 30, 14 Stat. 484). In the 1875 codification, the statute was moved from its place among the internal revenue measures and included among the general penal provisions. Id. at 418 n. 36. In United States v. Hirsch, 100 U.S. 33, 25 L.Ed. 539 (1879), the Supreme Court held that the conspiracy provision was generally applicable to the whole body of federal law. In so holding, the Court described the prohibited fraud as “any fraud against [the United States]. It may be against the coin, or consist in cheating the government of its land or other property.” Id. at 35.

“It is a well-established rule of construction that where Congress uses terms that have accumulated settled meaning under ... the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms.” Neder v. United States, 527 U.S. 1, 21, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999) (internal quotation marks and alterations omitted) (omission in the original). At common law, the words “to defraud” meant to deprive another of property rights by dishonest means.17 See Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S.Ct. 511, 68 L.Ed. 968 (1924); Porcelli v. United States, 303 F.3d 452, 457 n. 1 (2d Cir.2002) (noting that the “familiar common law meaning” of the term ‘ “fraud” ’ involved “using falsity to do the victim out of money or property interests”). Other federal criminal statutes are generally in accord. See, e.g., United States v. Pierce, 224 F.3d *60158, 165 (2d Cir.2000) (“In the context of mail fraud and wire fraud, the words ‘to defraud’ commonly refer ‘to wronging one in his property rights by dishonest methods or schemes’.... ” (quotation marks omitted)).

Nonetheless, the word “defraud” in § 371 has been interpreted much more broadly. The current understanding of “conspiracy to defraud” liability may be traced to two seminal Supreme Court cases. In the first case, Haas v. Henkel, 216 U.S. 462, 30 S.Ct. 249, 54 L.Ed. 569 (1910), the defendants obtained advance information from a statistician employed by the Department of Agriculture in order to gain a speculating advantage in the grain futures market. The Court invoked an expansive reading of the word “defraud” to bring the defendants’ conduct within the conspiracy statute. Specifically, the Court held that “it is not essential that such a conspiracy shall contemplate a financial loss or that one shall result. The statute is broad enough in its terms to include any conspiracy for the purpose of impairing, obstructing, or defeating the lawful function of any department of government.” Id. at 479, 30 S.Ct. 249.

Fourteen years later, in Hammer-schmidt v. United States, 265 U.S. 182, 44 S.Ct. 511, 68 L.Ed. 968 (1924), the Court attempted to retrench from the expansive reading of § 371 in Haas. In the words of Professor (later, Dean) Abraham S. Gold-stein of the Yale Law School, “[t]he expansive reading of the statute in Haas ... finally led the Supreme Court to attempt a systematic examination of what the judiciary had wrought. Hammerschmidt v. United States furnished the occasion.” Goldstein, 68 Yale L.J. at 429 (footnote omitted). The Hammerschmidt defendants were convicted of a conspiracy to defraud the United States by interfering with the World War I military draft through the printing and circulation of handbills urging those subject to the draft not to obey it. The Supreme Court reversed the convictions under § 371, holding that “[t]o conspire to defraud the United States means primarily to cheat the government out of property or money, but it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest.” Hammer-schmidt, 265 U.S. at 188, 44 S.Ct. 511 (emphasis added). Because the defendants’ “open defiance” of the Selective Service Act was devoid of deceit or other trickery, the Supreme Court held that their conduct did not fall within the scope of § 371. Id. at 189, 44 S.Ct. 511.

The Klein conspiracy doctrine at issue here is the progeny of Haas and Hammerschmidt,18 In United States v. Klein, 247 F.2d 908, 916 (2d Cir.1957), the defendants were charged with tax evasion and a “defraud conspiracy” in connection with their whiskey selling business. Id. at 915-16. The district court entered judgments of acquittal on the substantive counts, and the jury convicted on the remaining § 371 conspiracy count. On appeal, we found sufficient evidence to support the § 371 conspiracy conviction based on twenty “acts of concealment of income,” including false statements on tax returns and in interrogatory responses. Id. at 915. Relying on Hammerschmidt, we held that

[mjere failure to disclose income would not be sufficient to show the crime charged of defrauding the United States under 18 U.S.C. § 371. The statute, however, not only includes the cheating *61of the government out of property or money, but “also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest.”

Id. at 916 (quoting Hammerschmidt, 265 U.S. at 188, 44 S.Ct. 511). Thus, in order to prove a Klein conspiracy, the Government must show “(1) that [the] defendant entered into an agreement (2) to obstruct a lawful function of the Government (3) by deceitful or dishonest means and (4) at least one overt act in furtherance of the conspiracy.” United States v. Ballistrea, 101 F.3d 827, 832 (2d Cir.1996) (alteration omitted).

B. The Challenge to Klein

The defendants argue vigorously on appeal that the Klein conspiracy theory is textually unfounded. The Government’s stare decisis defense of the Klein doctrine lends support to this view, as it rests entirely on the construction of § 371 in Ham-merschmidt. There is nothing in the Government’s brief recognizable as statutory interpretation — no discussion of plain meaning, legislative history, or interpretive canons. Indeed, in all 325 pages of its brief, the Government does not even quote the text of § 371. The Government thus appears implicitly to concede that the Klein conspiracy is a common law crime, created by the courts rather than by Congress. That fact alone warrants considerable judicial skepticism. See United States v. Lanier, 520 U.S. 259, 267 n. 6, 117 S.Ct. 1219, 137 L.Ed.2d 432 (1997) (“Federal crimes are defined by Congress, not the court....”); see also Rogers v. Tennessee, 532 U.S. 451, 476, 121 S.Ct. 1693, 149 L.Ed.2d 697 (2001) (Scalia, ./., dissenting) (“[T]he notion of a common-law crime is utterly anathema today....”).

To justify an expansive reading of § 371, courts have occasionally implied that a conspiracy to defraud the Government is to be read more broadly than a conspiracy to defraud a private person. See Goldstein, 68 Yale L.J. at 424. Dicta in McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), for example, accepted such a distinction. Quoting a decision of the Court of Appeals for the First Circuit, the Supreme Court stated that “ ‘[a] statute which ... has for its object the protection of the individual property rights of the members of the civic body, is one thing; a statute which has for its object the protection and welfare of the government alone, which exists for the purpose of administering itself in the interests of the public, [is] quite another.’ ” Id. at 359 n. 8, 107 S.Ct. 2875 (quoting Curley v. United States, 130 F. 1, 7 (1st Cir.1904) (alterations in original)). But this conclusion appears to rest on a policy judgment — that, in the nature of things, government interests justify broader protection that the interests of private parties — rather than on any principle of statutory interpretation.

Notwithstanding these infirmities in the history and deployment of the statute, it is now well established that § 371 “is not confined to fraud as that term has been defined in the common law,” but reaches “‘any conspiracy for the purpose of impairing, obstructing or defeating the lawful function of any department of Government.’ ” Dennis v. United States, 384 U.S. 855, 861, 86 S.Ct. 1840, 16 L.Ed.2d 973 (1966) (quoting Haas, 216 U.S. at 479, 30 S.Ct. 249). Indeed, Coplan (whose counsel “takes the laboring oar” on the Klein conspiracy issue) “readily concedes that, were the weight of this Circuit’s case law outcome-determinative in this matter, his challenge to the government’s Klein theory would fail.” Coplan Reply 3.

Although the defendants argue forcefully on appeal that we should follow the *62example of Skilling v. United States, — U.S. -, 130 S.Ct. 2896, 2928, 177 L.Ed.2d 619 (2010), and “pare” the body of § 371 precedent “down to its core,” id., such arguments are properly directed to a higher authority. As an intermediate appellate court, we are bound to follow the dictates of Supreme Court precedents, no matter how persuasive we find the arguments for breaking loose from the moorings of established judicial norms by “paring” a statute. '

In sum, because the Klein doctrine derives from and falls within the scope of the law of the Circuit (itself grounded on long-lived Supreme Court decisions), we reject the defendants’ challenge to the validity of that theory of criminal liability.

II. The Sufficiency Challenges

In addition to challenging the legal validity of the Klein conspiracy theory, defendants Shapiro and Nissenbaum mount a series of sufficiency challenges.19 As a general matter, a defendant challenging the sufficiency of the evidence that led to his conviction at trial “bears a heavy burden,” United States v. Heras, 609 F.3d 101, 105 (2d Cir.2010) (quotation marks omitted), as the standard of review is “exceedingly deferential,” United States v. Hassan, 578 F.3d 108, 126 (2d Cir.2008). In evaluating a sufficiency challenge, we “must view the evidence in the light most favorable to the government, crediting every inference that could have been drawn in the government’s favor, and deferring to the jury’s assessment of witness credibility and its assessment of the weight of the evidence.” United States v. Chavez, 549 F.3d 119, 124 (2d Cir.2008) (internal citations, alterations and quotation marks omitted). Although sufficiency review is de novo, United States v. Yannotti, 541 F.3d 112, 120 (2d Cir.2008), we will uphold the judgments of conviction if “any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt,” Jackson, 443 U.S. at 319, 99 S.Ct. 2781.

A. Sufficiency of the Evidence Supporting Count One

Defendants Shapiro and Nissenbaum first challenge the sufficiency of the evidence with respect to each of the three alleged objectives of the § 371 conspiracy. As previously noted, Count One of the Redacted Indictment charged the trial defendants in a § 371 conspiracy with three objectives: (1) to defraud the United States (the Klein conspiracy), (2) to evade taxes, in violation of 26 U.S.C. § 7201, and (3) to make false statements to the IRS, in violation of 18 U.S.C. § 1001.

“To sustain a conspiracy conviction, the Government must present some evidence from which it can reasonably be inferred that the person charged with conspiracy knew of the existence of the scheme alleged in the indictment and knowingly joined and participated in it.” United States v. Rodriguez, 392 F.3d 539, 545 (2d Cir.2004) (quotation marks omitted). In the context of a conspiracy conviction, “deference to the jury’s findings is especially important ... because a conspiracy by its very nature is a secretive operation, and it is a rare case where all aspects of a conspiracy can be laid bare in court.” United States v. Rojas, 617 F.3d 669, 674 (2d Cir.2010) (quotation marks omitted) (alteration in original). Where, as here, “a jury returns a guilty verdict on an indictment charging several acts in the *63conjunctive, ... the verdict stands if the evidence is sufficient with respect to any one of the acts charged.” Griffin v. United States, 502 U.S. 46, 56-57, 112 S.Ct. 466, 116 L.Ed.2d 371 (1991) (quotation marks omitted). For that reason, “the lack of sufficient evidence to support one of the objects of a multi-object conspiracy [will] not vitiate the conspiracy conviction, where there [i]s sufficient evidence to support [another] object.” United States v. Pascarella, 84 F.3d 61, 71 (2d Cir.1996).

In what follows, we consider the conspiracy evidence against defendants Shapiro and Nissenbaum, mindful that “[t]he character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole,” Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962) (quotation marks omitted). Nevertheless, for the sake of clarity and ease of analysis, we examine the evidence with respect to each alleged objective of the conspiracy in some detail before considering the conspiracy “as a whole.” For the reasons that follow, we conclude that the evidence with respect to the intent of Shapiro and Nissenbaum is insufficient to support their convictions on Count One.

1. Conspiracy Evidence Against Shapiro

a. Klein Conspiracy Objective

The centerpiece of the conspiracy case against Shapiro, an E & Y partner and tax lawyer with nearly four decades’ experience, is the Government’s claim that he “coached” E & Y partner Thomas Dougherty to lie to the IRS by helping him come up with non-tax explanations for the COBRA transaction that Shapiro knew were not true. In rebuttal summation, the Government argued that “[i]f you credit Mr. Dougherty’s testimony, ... that alone is proof beyond a reasonable doubt on the conspiracy count at least as to ... Mr. Shapiro.” On appeal, the Government similarly argues that Dougherty’s testimony “standing alone ... would be sufficient to support his conviction on the false statements object of the conspiracy.” Indeed, variations on the assertion that Shapiro “coached” Dougherty to lie appear no fewer than four times in the Government’s brief. See Gov’t’s Br. 67, 112, 117, 134.

But the record with respect to Dougherty’s testimony is considerably more equivocal than in the Government’s account.

April 2, 2001 Conference Call. Dough-erty testified that in March 2001, he advised Coplan that the IRS was auditing the WRB Lake transaction20 — the first such audit of a COBRA transac