Constitutionality

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7212- Interference with Administration of Internal Revenue Laws: Constitutionality

   

[78-2 USTC ¶9522] United States of America , Plaintiff v. Stamm F. Johnson, Defendant

U. S. District Court, Dist. Ore. , No. CR 75-265, 424 FSupp 631, 10/13/76

[Code Sec. 7212--result unchanged under '76 Tax Reform Act]

Criminal penalties: Forced rescue of seized property: Due process.--The taxpayer was convicted of violating the statute against the forcible rescue of property seized by the IRS. His due process argument, that the seizure prior to notice and hearing was unconstitutional, was rejected because the courts have consistently ruled that collection of revenues is an extraordinary situation, exempt from due process requirements of notice and hearing.

Sidney I. Lezak, United States Attorney, Charles H. Turner, Assistant United States Attorney, Portland, Ore. 97207, for plaintiff. Phil M. Kelley, Steiner & Kelley, 200 S. W. Market, Portland, Ore. 97201, Laurence L. Janke, 8532 N. Ivanhoe, Portland, Ore. 97203, for defendant.

Background

SKOPIL, District Judge:

This is a prosecution under 26 U. S. C. §7212(b) for forcible rescue of property seized by the Internal Revenue Service ("IRS"). Defendant, Stamm F. Johnson, concedes that he violated the statute. He asserts as his defense the unconstitutionality of the underlying IRS seizure, which was accomplished pursuant to 26 U. S. C. §6331.

The defendant is a member of the Oregon State Bar. He specializes in the area of creditors' remedies and is active in the Oregon State Bar Committee on Debtor-Creditor Rights. He participated in the drafting of Oregon legislation on creditors' rights and civil procedure. I am satisfied that Mr. Johnson committed the acts in issue in good faith and for the sole purpose of testing the validity of IRS summary seizure powers. As he has conceded, his obvious sincerity is not properly a factor which I may consider in ruling on his constitutional defense.

By stipulation of the parties, this case was tried to the court on proposed witness statements and exhibits. Each side had the opportunity to object to the proposed testimony and to cross-examine witnesses. The defendant filed his objections to parts of the government's proposed testimony and to some of its exhibits. In view of Mr. Johnson's repeated and voluntary admissions that he committed the acts alleged in the indictment, it was not necessary for me to consider the evidence to which Mr. Johnson objects in order to find that he committed each of the elements of a violation of 26 U. S. C. §7121(b). I sustain the objections.

Facts

The following facts led up to the indictment. In 1975 Mr. Johnson and his wife were the sole shareholders of National Credit Bureau, Inc. ("NCB"), a Portland collection agency. While a director and officer of the corporation, Mr. Johnson did not take active part in the day-to-day management of the business.

On April 4, 1975 , because of unpaid taxes owed by the corporation, agents of the IRS levied upon business equipment including desks and typewriters located at the NCB office. The agents accomplished this levy or seizure by installing locks on the office entrances and by attaching warning notices ¹ to the windows. No tags or warnings were attached to the individual items of personal property inside the office. The agents did not intend to seize the real estate.

Mr. Johnson learned of the levy late in the afternoon of April 4, a Friday. The next day he went to the NCB office and observed the warning notice and locks. He proceeded to remove the locks, gain entrance to the premises, and remove the notices. He had a locksmith install new locks on the building. About ten days later NCB's tax arrearage was paid in full and the IRS formally released its levy.

As stated in defendant's brief, "Now charged with violation of 26 U. S. C. §7212(b) ² Mr. Johnson freely acknowledges that he violated the letter of that statute with full knowledge of the possible consequences."

Constitutionality of Summary Seizure

The defense is that the statutory authority for the seizure of the NCB property, 26 U. S. C. §6331, ³ violates due process in that it permits the IRS to levy upon property of delinquent taxpayers without prior notice and hearing.

The Supreme Court upheld the summary seizure power of the IRS in Phillips v. Commissioner [2 USTC ¶7413], 283 U. S. 589 (1931). The Court has never questioned the continued vitality of that decision. Defendant argues, however, that principles of due process announced in recent cases limiting the availability of prejudgment attachment and garnishment by private creditors should be extended to the tax collector. Sniadach v. Family Finance, 395 U. S. 337 (1969); Fuentes v. Shevin, 407 U. S. 67 (1972); North Georgia Finishing Company v. DiChem, 419 U. S. 601 (1975); cf. Mitchell v. W. T. Grant, 416 U. S. 600 (1974).

The defendant acknowledges that Fuentes specifically approves the "summary seizure of property to collect the internal revenue of the United States ". 407 U. S. at 91-92. He argues that the over-all policy of the cases cited invalidates the IRS seizure involved here. I disagree.

I decline to accept defendant's invitation to act against the overwhelming authority which upholds summary execution on the property of delinquent taxpayers. It is undisputed that due process requires notice and opportunity for a hearing before a person is deprived of a property right "except for extraordinary situations where some valid governmental interest is at stake that justifies postponing the hearing until after the event." Boddie v. Connecticut , 401 U. S. 371, 379 (1971). Notwithstanding defendant's detailed analysis of the cases, the courts unanimously agree that collection of the revenues upon which our government depends is such an "extraordinary situation". Phillips v. Commissioner, supra; Fuentes v. Shevin, supra; Tavares v. United States [74-1 USTC ¶9240], 491 F. 2d 725 (9th Cir. 1974); United States v. Heck [74-2 USTC ¶9729], 499 F. 2d 778 (9th Cir. 1974).

In his closing argument, Mr. Johnson stated that the remedy of distraint did not extend at common law to the collection of income taxes. He asserted that 26 U. S. C. §6331 was originally enacted during Reconstruction, when the federal government presumably had an exceptionally strong interest in tax collection. While these points are of interest from an historical point of view, they have no bearing on the issue which is presently before me.

I recognize Mr. Johnson's sincerity, good faith, and favorable reputation as a member of the bar. I have no choice but to find him guilty as charged in the indictment.

This opinion constitutes special findings of fact in accordance with Fed. R. Crim. P. 23(c).

¹ The warning notices read as follows:

"WARNING

"UNITED STATES GOVERNMENT SEIZURE

This property has been seized for nonpayment of internal revenue taxes, by virtue of levy issued by the District Director of Internal Revenue. All persons are warned not to remove or tamper with the property, in any manner, under severe penalty of the law."

² 26 U. S. C. §7212(b) provides in part:

"Any person who forcibly rescues or causes to be rescused any property after it shall have been seized under this title, or shall attempt or endeavor to do so, shall [suffer the penalties provided]."

³ 26 U. S. C. §6331 provides in part:

"(a) If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary or his delegate to collect such tax . . . by levy upon all property . . . belonging to such person. . . . If the Secretary or his delegate makes a finding that the collection of such tax is in jeopardy, notice and demand for immediate payment of such tax may be made by the Secretary or his delegate and, upon failure or refusal to pay such tax, collection thereof by levy shall be lawful without regard to the 10-day period provided in this section.

"(b) The term 'levy' as used in this title includes the power of distraint and seizure by any means. . . ."

On March 3, 1975 , the IRS mailed notices showing the taxes due to NCB. Mr. Johnson suggests that an employee of NCB intentionally failed to notify him of the tax liability. Under this statute, of course, NCB is the corporate "person" entitled to notice and demand.

 

 

 

[79-1 USTC ¶9368] United States of America , Plaintiff-Appellee v. Robert Main, Defendant-Appellant

(CA-7), U. S. Court of Appeals, 7th Circuit, No. 77-2232, 5/11/79 , Affirming an unreported District Court decision

[Code Sec. 7212]

Forcible rescue: Property: Illegal seizure of: Applicability of exclusionary rule.--The conviction of a taxpayer for the forcible rescue of property seized by IRS agents without a warrant was upheld for the following reasons: the agents had general authority under the tax code to seize the property, and the property was not subject to the exclusionary rule. The retroactive exclusion of property seized by a government agent, who conformed his conduct to the prevailing statutory and constitutional norm, is not required, despite the fact that a subsequent U. S. Supreme Court decision held such a seizure to be unlawful.

Warren E. White, United States Attorney's Office, Danville, Illinois 61832, for plaintiff-appellee. George Kaye, 117 South Market, Paxton, Illinois 60957, for defendant-appellant.

Before FAIRCHILD, Chief Judge, PELL and BAUER, Circuit Judges.

PELL, Circuit Judge:

This case raises an issue expressly reserved by the Supreme Court in G. M. Leasing Corp. v. United States [77-1 USTC ¶9140], 429 U. S. 338, 359 (1977): whether property seized by agents of the Internal Revenue Service without a warrant must be excluded from a subsequent criminal prosecution under the tax code. In order to decide this case, however, only one aspect of that issue need be considered, i. e., the retroactive effect of an exclusionary rule based on G. M. Leasing. The prosecution before us was for violations of I. R. C. §7212(b), 26 U. S. C. §7212(b). ¹

I. Factual Background. The defendant, Robert Main, was an incorporator, president, and registered agent of Main Cob Company, Inc. (the corporation). The corporation was the taxpayer involved in the I. R. S.'s collection investigation.

The corporation was formed in 1966, having been incorporated under Illinois law by the defendant, his wife (Bettie Main), and Mary Hansen, not a relative of the Mains. Forty-eight per cent of the stock was held by the Mains' children and fifty-two per cent by Mary Hansen and her children. From the record it appears that the corporation's main business was the buying of corn cobs and hauling them to a local plant where they were sold for processing. The corporation apparently conducted its business from the Mains' residence near Gibson City, Illinois. The corporation owned that residence prior to September 1973, when the property was conveyed by a quit-claim deed to John Main, son of the defendant and Bettie Main. According to Bettie Main's testimony the corporation ceased doing business late in 1975. It was dissolved on December 1, 1976 , by the State of Illinois for failure "to file an annual report and pay an annual franchise tax."

In May 1976, the I. R. S. assessed the corporation for unpaid highway use taxes, 26 U. S. C. §§ 4481 et seq., due between January 1970 and September 1974 and totalling $6,425.57. On July 23, 1976 , a final notice before seizure was sent to the corporation. On August 24, the I. R. S. filed a notice of federal tax lien with the Recorder of Deeds of Ford County, Illinois, against the corporation for the May highway use tax assessments. On September 2, the corporation's account was assigned to Revenue Officer Tom McAuley for collection.

On October 7, 1976 , a second notice of federal tax lien was filed for the highway use taxes and on October 13, McAuley and three other agents visited the defendant's residence. The defendant met the agents outside the house and McAuley demanded payment of the tax assessments. The defendant told McAuley he would have to collect the taxes from the corporation. McAuley replied that as far as he was concerned the defendant was the corporation. The agents then affixed seizure notices to a number of trucks and semi-trailers in the yard and to a 1975 Oldsmobile, used by the defendant as his personal automobile. ² According to McAuley, the defendant became upset at this and made threatening gestures, at which the agents withdrew. A notice of seizure, inventorying the vehicles tagged, was sent to the corporation at the Mains' address and the certified mail receipt was returned to McAuley signed by Bettie Main.

On October 29, the I. R. S. assessed the corporation for unpaid employee income tax withholdings, 26 U. S. C. §§ 3401 et seq., and unpaid unemployment taxes, 26 U. S. C. §§ 3301 et seq., totalling $57,669.80, and on November 5, notices of federal tax liens were filed for these taxes. During this period, McAuley learned that the corporation had entered into a contract to purchase a house in Gibson City which was being used as rental property.

The events which led to the defendant's prosecution began on November 11, 1976 . McAuley called the Mains' house at approximately 8:00 a. m. and was told by Bettie Main that the defendant was gone for the day. At about 9:30 a. m., McAuley arrived at the Main residence with five other agents. He attempted to give Bettie Main some papers, including a copy of the October 13 notice of seizure and a release of all items previously seized, except the 1975 Oldsmobile. The Oldsmobile was parked in the driveway a few feet from the house and some twenty feet off the public road. Bettie Main asked McAuley whether he had a warrant and he told her he did not and did not need one. Acting on the earlier advice of her attorney, she refused to accept or sign a copy of the release, locked the Oldsmobile, and went into the house. McAuley left the papers inside a rear storm door of the house. According to Bettie Main and two of her children, the agents then walked around the house, out into a fenced side lot, and looked into and entered a garage and barn, before leaving the premises.

After leaving the Main residence, the agents went to Gibson City to make arrangements for towing the Oldsmobile. In addition, McAuley and another agent went to the rental property in Gibson City to post notices of seizure there. At the rental house, the agents identified themselves to the tenant, Alma Day, and told her their purpose. Mrs. Day said, "Come on in." Inside, the agents taped a notice of seizure to the inside of the window of the back door and proceeded to the front of the house. There, Mrs. Day requested that they tape the notice to the front window, rather than the door, so that her children would not tear the notice off. The agents complied with that request, served Mr. Day with a notice to pay rent to the I. R. S. when due, and left. The agents returned to the Main residence about 11:30 a. m. with a tow truck from Gibson City. They found the Oldsmobile still locked and parked in the driveway. The agents entered upon the Mains' premises with the tow truck operator and under their direction the car was towed to a garage in Gibson City for storage pending its sale.

The following morning, November 12, 1976 , the defendant went to the garage where the Oldsmobile was being stored. Upon learning that the automobile was there, the defendant told the garage mechanic that he would be back. The mechanic told the defendant that the I. R. S. agents had instructed him to tell the defendant that it was unlawful for the defendant to remove the automobile, but that if the defendant wanted to do so, the mechanic was not to resist him. The defendant left, but returned half an hour later, opened the rear door of the garage, and drove the Oldsmobile away. Count I of the indictment charged the defendant with forcible rescue of the Oldsmobile.

Count II charged the defendant with forcible rescue of the rental house in Gibson City. The remaining facts leading to that charge are as follows. On or about December 9, 1976 , the Days sent the monthly rental payment to the I. R. S. A few days later, the defendant called at the house to collect the rent and was informed of the seizure and the payment to the I. R. S. The defendant went through the house, tore down the notices of seizure, and told the Days to resume paying the rent to him. When the defendant left, Mr. Day called the I. R. S. and was told not to start trouble with the defendant and to go ahead and pay the rent to him until a new notice was posted.

The defendant was tried before a jury and found guilty on both counts. He was sentenced to imprisonment for one year on each count, to run concurrently.

II. The Elements of Forcible Rescue. The defendant's two main contentions involve the lawfulness of the warrantless seizure of the Oldsmobile and the rental house by the I. R. S. agents. The first contention is that in order to prove that the defendant forcibly rescued property, the Government must show that the property had been seized lawfully. The defendant relies on Cooper v. United States, 299 F. 483 (3d Cir. 1924), for the proposition that, "lawful seizure . . . is a prerequisite [to unlawful rescue]. And the lawfulness of the seizure must be shown." Id. at 484. The defendant, relying on G. M. Leasing, contends that the seizure was unlawful because the agents failed to obtain a warrant. But defendant has failed to recognize that the court in Cooper went on to say that one way to show the lawfulness of a seizure is to show that it was performed by one authorized to do so by virtue of his office. 299 F. at 485. Thus lawfulness of a seizure under §7212(b) means only that it was performed by a proper official with general authority under the tax code to make the seizure; disputes over other aspects of the legality of the seizure are irrelevant to the elements of the crime of forcible rescue. As this court has noted, "If the rule were otherwise it would 'encourage violent self-help where civil remedies are admittedly available.' United States v. Scolnick [68-2 USTC ¶9466], 392 F. 2d [320, 326 (3d Cir.), cert. denied sub nom. Brooks v. United States, 392 U. S. 931 (1968)]." United States v. Harris [75-2 USTC ¶9644], 521 F. 2d 1089 (7th Cir. 1975). Here, it was shown that the seizure was made by agents of the I. R. S. and, therefore, was made "under [the Internal Revenue Code]" as required by §7212(b). United States v. Harris, indicates that the elements of the crime of forcible rescue, under §7212(b), are: (1) seizure of property by one authorized to do so under the Internal Revenue Code, (2) the defendant's knowledge that the property has been so seized, and (3) a forcible retaking of the property by the defendant. The evidence supports the jury's verdict on each of these elements and, indeed, the defendant does not appear to dispute the facts as we have stated them, arguing only for a different interpretation of the first element above. ³

Underlying the defendant's contention that the Government must show the seizure to have been lawful in all respects is his notion that he had the right to determine for himself that the seizures were unlawful and to remedy that situation by retaking the property. This underlying assumption of a right to self-help finds some support in case law. See Wainwright v. City of New Orleans, 392 U. S. 598 (1968) (opinions of Warren, C. J., and Douglas, J., dissenting from the dismissal of certiorari; the case involved the right to resist unlawful arrest); United States v. DiRe, 332 U. S. 581, 594 (1948) (right to resist unlawful arrest); Bad Elk v. United States, 177 U. S. 529 (1900) (same); Prosser, Law of Torts §22 (4th ed. 1971) (right to recapture chattel). These rules allowing for self-help are based upon the common law and rooted in the concept of self-defense. The difficulty with the defendant's reliance on such underlying assumptions is that these common laws rules of self-help have been altered by the very statute under which the defendant has been convicted. Section 7212(b) represents a legislative determination that in the context of the enforcement of the tax laws, once property has been seized, the risk of disorder by violent recovery of the property should be avoided entirely and the one who claims the right to the property should pursue legal remedies. See also Ill. Ann. Stat. ch. 38, §7-7 (Smith-Hurd 1972) (person may not resist arrest, lawful or unlawful, by known police officer); N. Y. Penal L. §35.27 (McKinney 1975) (same). ⁴ This policy decision by Congress was recognized in our construction of the elements of §7212(b) in Harris, supra, and the requirement of a warrant under G. M. Leasing, supra, does not affect the balance struck by the statute.

III. The Suppression Issue. That brings us to the defendant's second main contention and a fuller consideration of the effect of G. M. Leasing on the defendant's conviction. In that case I. R. S. agents seized a number of automobiles owned by G. M. Leasing Corporation, which the agents considered to be the alter ego of the taxpayer. "None of the cars was on property in which [G. M. Leasing] had an interest." 429 U. S. at 344. In addition, the agents entered upon premises rented by G. M. Leasing for its offices, forcibly entered a cottage on the property used as the office, and seized the contents of the cottage, including books and records. The Supreme Court held that the seizure of the automobiles from places other than on G. M. Leasing's property was authorized by the I. R. S.'s power to collect taxes by "distraint and seizure by any means," 26 U. S. C. §6331(b), ⁵ and no warrant was required. But the Court distinguished the seizure of the contents of the cottage saying:

It is one thing to seize without a warrant property resting in an open area or seizable by levy without an intrusion into privacy, and it is quite another thing to effect a warrantless seizure of property, even that owned by a corporation, situated on private premises to which access is not otherwise available for the seizing officer.

429 U. S. at 354.

The Court concluded that a warrant was required in order to enter private property for the purpose of seizing goods in satisfaction of tax liabilities, and said:

The intrusion into petitioner's office is therefore governed by the normal Fourth Amendment rule that "except in certain carefully defined classes of cases, a search of private property without proper consent is 'unreasonable' unless it has been authorized by a valid search warrant." (Citation omitted.)

Id. at 358. The court found it unnecessary to decide whether the unlawful seizure of the contents of the cottage required suppression of the seized items in any subsequent prosecution because G. M. Leasing had not been prosecuted and the issue was, therefore, premature.

We need decide only one aspect of the issue reserved in G. M. Leasing, that being whether, even if the exclusionary rule applies, the case should be given retroactive effect. The seizures in this case took place in November 1976. The decision in G. M. Leasing was handed down on January 12, 1977 . Therefore, if the case is to be applied prospectively only, evidence of the seizures here was properly admitted. ⁶

Applying "normal Fourth Amendment rule[s]" to the facts of this case, it appears that the entry into and seizure of the rental house was lawful because the tenants consented to the entry, see United States v. Matlock, 415 U. S. 164 (1974), ⁷ but that the entry upon the Main's property and seizure of the Oldsmobile was unlawful in the absence of a warrant, see Coolidge v. New Hampshire, 403 U. S. 443 (1971). ⁸ We need not make a detailed analysis of the legality of the seizures, however, because the evidence of these seizures, even if unlawful under G. M. Leasing, need not have been excluded from the defendant's prosecution for forcible rescue. Because our decision is based solely on the non-retroactivity of the rule in G. M. Leasing, we need not decide the broader question of the applicability of the exclusionary rule apparently left open by the Court in that case.

Guidance for our decision of the retroactivity issue is found in United States v. Peltier, 422 U. S. 531 (1975). The issue in that case was similar in many ways to the one presented here. Peltier involved the question whether the rule in Almeida-Sanchez v. United States, 413 U. S. 266 (1973), holding that warrantless searches conducted by roving Border Patrol agents 25 miles from the border were unconstitutional, should be applied to such searches conducted before the date of the decision in Almeida-Sanchez. In concluding that Almeida-Sanchez should not be given retroactive effect, the Court in Peltier analyzed previous retroactivity cases. It found that no decision excluding evidence "in order to enforce a constitutional guarantee that does not relate to the integrity of the factfinding process" had ever been held retroactive. The Court then analyzed the effect of a retroactivity holding on the deterrence and judicial integrity rationales for the exclusionary rule. The primary focus of the Court's analysis of both of these rationales was on "[whether] the law enforcement officer had knowledge, or may properly be charged with knowledge, that the search was unconstitutional under the Fourth Amendment." 422 U. S. at 542. Accord United States v. Berry, 571 F. 2d 2 (7th Cir.), cert. denied sub nom. Richardson v. United States, 99 S. Ct. 129 (1978). The Court noted that the Border Patrol agents in Peltier had relied in good faith on a statute and administrative regulations which had long been construed to allow warrantless searches within 100 air miles of any external boundary of the United States and had been upheld consistently by the courts. 422 U. S. at 539-542. For that reason, the Court concluded that retroactive application of the exclusionary rule would have no deterrent effect and that failure to apply it retroactively would not involve the courts in willful violations of the Constitution.

The similarities to the present case are striking. Here too the I. R. S. agents acted pursuant to a statute enacted by Congress, 26 U. S. C. §6331, and the I. R. S. Manual, neither of which required a warrant to enter private property to effect a tax seizure. ⁹ And as the Court observed in G. M. Leasing, similar statutory authority has been provided by Congress since 1791. 429 U. S. at 354. The courts have consistently upheld these provisions. See e.g. United States v. Pilla [77-2 USTC ¶9636], 550 F. 2d 1085, 1091-1092 (8th Cir.), cert. denied, 432 U. S. 907 (1977); Mason v. Rollins, 16 Fed. Cas. 1061, 1063, Case No. 9,252 (C. C. N. D. Ill. 1869) Thus, as in Peltier, "we cannot regard as blameworthy those parties who conform their conduct to the prevailing statutory or constitutional norm." (Footnote omitted) 422 U. S. at 542. And, as in Peltier, the conclusion follows that neither these revenue officers nor others in the future will be deterred from making unlawful seizures by excluding evidence of these seizures, made in good faith reliance on established legal rules; nor will the "imperative of judicial integrity" be offended by admission of evidence of such seizures.

IV. The Sentence. The defendant also contends that the sentence of imprisonment for one year on each count, to run concurrently, was excessive. The defendant points out that the defendant in United States v. Harris, supra, 521 F. 2d at 1091, was sentenced to only forth minutes in the custody of the United States Marshal. But cf. United States v. Pilla, supra, 550 F. 2d at 1088 (defendant convicted of one count of forcible rescue sentenced to one year). He argues that the sentencing judge gave insufficient weight to certain circumstances which he regards as mitigating.

The general rule on review of sentences in the federal courts is: "once it is determined that a sentence is within the limitations set forth in the statute under which it is imposed, appellate review is at an end (footnote and citations omitted)," unless the sentencing judge relied on improper or unreliable information in exercising his or her discretion, or failed to exercise any discretion at all, in imposing sentence. Dorszynski v. United States, 418 U. S. 424, 431, 443 (1974); United States v. Tucker, 404 U. S. 443, 446-447 (1972); United States v. Cardi, 519 F. 2d 309, 311-312 (7th Cir. 1975). Section 7212(b) authorizes imprisonment for up to two years upon conviction of forcible rescue. Since the defendant was convicted on two counts under the statute, he could have been sentenced to a total of four years imprisonment. Thus the sentence of one year terms to run concurrently is well within the limits of the statute.

The defendant does not contend that the sentencing judge considered improper information in setting the sentence or that he failed to exercise his discretion at all. The sentencing transcript shows that the court considered the pre-sentence report and letters sent to the judge on the defendant's behalf. The defendant's real dispute with the district court is over the weight to be given to the various factors considered. The cases cited above make clear that that is a matter for the sentencing court's discretion, with which this court will not interfere. See also United States v. Foss, 501 F. 2d 522, 529 (1st Cir. 1974).

We have considered defendant's other contentions and found them to be without merit.

For the reasons hereinbefore set out, we affirm the judgment of the district court.

¹ §7212(b) provides:

(b) Forcible rescue of seized property. Any person who forcibly rescues or causes to be rescued any property after it shall have been seized under this title, or shall attempt or endeavor so to do, shall, excepting in cases otherwise provided for, for every such offense, be fined not more than $500, or not more than double the value of the property so rescued, whichever is the greater, or be imprisoned not more than 2 years.

² See note 3, infra.

³ The defendant has raised two subsidiary issues regarding the lawfulness of the seizures in this case. First, the defendant contended in the district court and maintains here that the 1975 Oldsmobile was never owned by the corporation, but was his personal property. Second, he argues that because the corporation was dissolved by the state on December 1, 1976, prior to the day he entered the rental house and removed the seizure notices, the interests of the corporation in the contract to purchase the rental house, which were what the I. R. S. seized, no longer existed, so that there was nothing for him to rescue. Both arguments miss the point of §7212(b). As to the Oldsmobile, the actual ownership was disputed. The certificate of title showed the corporation as owner on the date of the seizure. On the application for that certificate of title, the defendant himself wrote, in the space marked Written Signature of Owner, "Main Cob Co. Inc., Robert Main." The day after the seizure, the defendant applied for a corrected title which then showed him as sole owner. Regarding both the car and the rental house, the I. R. S. had concluded that the corporation was the defendant's alter ego. If the I. R. S. was correct, a point we need not decide here, then the corporation would have "no countervailing effect," and the defendant would be liable for its unpaid taxes. G. M. Leasing v. United States, supra, 429 U. S. at 351. The point of §7212(b) is that legal questions such as these are not be settled by self-help, but by the civil remedies provided in the statute.

⁴ The Practice Commentary to the New York provision, added in 1968, contains a detailed exposition of the legislative policy decision which changed the common law rule in the arrest situation. Practice Commentary, N. Y. Penal L. §35.27 (McKinney 1975). See People v. Lattanzio, 35 A. D. 2d 313, 316 N. Y. S. 2d 163 (3d Dept. 1970) (holding §35.27 constitutional as a reasoned exercise of the police power to protect the safety of both police officers and the citizenry).

⁵ 26 U. S. C. §6331 reads in part:

(a) Authority of Secretary or delegate.--If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary or his delegate to collect such tax . . . by levy upon all property and rights to property . . . belonging to such person or on which there is a lien provided in this chapter for the payment of such tax. . . .

(b) Seizure and sale of property.--The term "levy" as used in this title includes the power of distraint and seizure by any means. A levy shall extend only to property possessed and obligations existing at the time thereof. In any case in which the Secretary or his delegate may levy upon property or rights to property, he may seize and sell such property or rights to property (whether real or personal, tangible or intangible).

. . . .

⁶ The admissibility of evidence of the seizures is important, of course, because if the evidence must be suppressed, the Government would be unable to show that the rescued property had been seized at all. The difficulty would be similar to that in a drug possession case in which evidence of the unlawful seizure of the drugs had to be suppressed. Cf. United States v. Peltier, 422 U. S. 531 (1975) (discussed infra).

⁷ While it has been held that a landlord may not consent to a search of a house rented to another, Chapman v. United States, 365 U. S. 610 (1961), or a hotel clerk authorize a search of a customer's room, Stoner v. California, 376 U. S. 483 (1964), it is not the respective property rights involved that control, but the consenter's "authority over or other sufficient relationship to the premises or effects sought to be inspected." United States v. Matlock, 415 U. S. 164, 171 (1974). Matlock approved consent by third parties with equal possessory and privacy interests in the premises to those of the defendant. It would seem to follow a fortiori that the tenant, whose possessory and privacy interests are superior to the landlord's, should be able to give valid consent at least to the entry by the agents. Once validly admitted to the premises, G. M. Leasing appears to hold that a warrantless seizure, by posting the seizure warnings, would be authorized by §6331. 429 U. S. at 352, 354, 358.

⁸ We note that the I. R. S. has concluded that under G. M. Leasing, a warrant is required in order "to seize a vehicle from a taxpayer's front yard, driveway, or carport." I. R. S. Manual, Supp. 5G-88, at p. 9433-5 (CCH December 15, 1977 ). The Government argues here that the warrantless entry and seizure in this case can be justified under the "plain view," "openfields," and so-called "automobile" exceptions to the warrant requirement. The main difficulty with these arguments is the striking similarity between the facts (as to the location and circumstances of the automobile) here and in Coolidge, supra, where these arguments were considered and rejected. The Coolidge distinction between automobiles on the highway or in public places and those parked on private property was recognized again in Cardwell v. Lewis, 417 U. S. 583, 593 (1974). We, however, will confront the "plain view" issue at such time as it may be appropriate for reaching a decision and then upon the particular facts presenting the issue. In addition, in disputing the legality of the physical seizure of the Oldsmobile on November 11, the parties have not raised the possible effect of the earlier tagging of that car by the agents on October 13. In view of the result we reach on the retroactivity issue, there is no need to consider this point and we express no opinion on it.

⁹ The I. R. S. Manual has been revised to reflect the decision in G. M. Leasing. There is now a separate part dealing with seizures on private property. I. R. S. Manual ¶5342 (CCH Nov. 20, 1978 ). That part begins:

5342.1

General

(1) The Supreme Court of the United States held in G. M. Leasing v. United States (citation omitted) that a warrantless entry onto the private areas of personal or business premises of a taxpayer for the purpose of seizing property to satisfy a tax liability is in violation of the Fourth Amendment to the Constitution of the United States. As a result, before such seizures are made, revenue officers must either secure the taxpayer's written consent to entry or a court order permitting the entry. . . .

See also I. R. S. Manual Supps. 5G-85, (CCH August 15, 1977 ) and 5G-88 (CCH December 15, 1977 ).

 

 

 

 

 

 

[92-2 USTC ¶50,506] United States of America, Appellee v. Eugene R. Rosnow, Appellant United States of America, Appellee v. Melford H. Haugen, Appellant United States of America, Appellee v. Juanita M. Dewey, Appellant United States of America, Appellee v. David C. Rodewald, Appellant United States of America, Appellee v. Kermit H. Rodewald, Appellant United States of America, Appellee v. Wallace H. Rodewald, Appellant United States of America, Appellee v. Leland Frederick Erickson, Appellant United States of America, Appellee v. Robert M. Dick, Appellant United States of America, Appellee v. Harry E. Carlson, Appellant United States of America, Appellee v. Duane C. Hansen, Appellant United States of America, Appellee v. Roger Walter Sands, Appellant United States of America, Appellee v. Dennis W. Sands, Appellant. United States of America, Appellee v. Jeffry R. Morse, Appellant. United States of America, Appellee v. George A. Yant, Appellant United States of America, Appellee v. Karl H. Peters, Appellant

(CA-8), U.S. Court of Appeals, 8th Circuit, 91-2945, 91-2946, 91-2947, 91-2948, 91-2952, 91-2956, 91-2957, 91-2968, 91-2978, 91-2979, 91-2980, 91-2981, 91-2984, 91-2985, 91-2986, 10/1/92, Affirming in part, reversing and remanding in part an unreported District Court decision

[Code Sec. 7203 ]

Conspiracy: Multiple conspirators: Jury instructions: Prejudicial variance.--The convictions for conspiracy against several codefendants who engaged in similar tax avoidance acts for similar reasons were overturned because a jury instruction on the conspiracy was prejudicial. The defendants intended to benefit themselves individually, not the group as a whole. Although some were assisted by the same people, mutual assistance or dependence was not shown. Thus, the evidence was insufficient to establish the existence of a single overall conspiracy with regard to the filing of false tax forms with the IRS. While several groups of conspirators were identified, the jury was not given a multiple conspiracy instruction.

[Code Secs. 7206 and 7212 ]

Evidence: Admissible: Material: Self-representation: Right to counsel: Impartial jury: Sentencing credit.--Evidence of conspiracy obtained in the search of various taxpayers' residences was admissible where the search warrants were sufficiently specific. Additionally, false statements made by several taxpayers who had the capacity to influence a government agency's actions were material. Moreover, the evidence obtained was sufficient to support convictions of the filing of false Forms 1096 and 1099 by several taxpayers whose intent was to obstruct or impede IRS investigations. Another taxpayer was properly convicted of possession of counterfeit government obligations with intent to defraud the IRS. Furthermore, the district court did not err in denying several taxpayers' motions for self-representation when each of the taxpayers evidenced an understanding of the waiver of the right to counsel. The taxpayers' motions were merely dilatory and disruptive acts. The district court, which had proper jurisdiction over Title 26 offenses, did not abuse its discretion or deprive one of the taxpayers of the right to be tried by an impartial jury by not dismissing the entire jury subsequent to one juror's comment that the taxpayer claimed had prejudiced the other jurors during voir dire.

Before MCMILLIAN, Circuit Judge, LAY, Senior Circuit Judge, and VAN SICKLE, ^* Senior District Judge.

PER CURIAM:

Several defendants ¹ challenge their convictions on thirty-four counts arising from conduct relating to filing false tax forms with the Internal Revenue Service (IRS). All of the defendants, with the exception of Robert Dick, were convicted of conspiracy to file false IRS forms. 18 U.S.C. §371 (1988). The indictment stated the objectives of the conspiracy as follows: (1) to report false information to the IRS in order to cause tax problems for persons whom the defendants felt had wronged them; (2) to report false information to the IRS in order to obtain refunds; (3) to market a scheme designed to accomplish these objectives; (4) to use counterfeit certified sight drafts to obtain money from the IRS; and (5) to impede and corrupt the lawful functions of the IRS. Additionally, twelve of the defendants ² were convicted of the substantive charge of filing false tax forms 1096 or 1099 with the IRS. 26 U.S.C. §7206(1) (1988). Dick, Dewey, Haugen and Yant were convicted under the same statute of submitting false forms 1040, requesting tax refunds. Carlson, Dewey, Erickson, Haugen, Rosnow, and Roger Sands were convicted of attempting to impede or obstruct an IRS investigation under 26 U.S.C. §7212(a) (1988). And Dewey was convicted of possession of counterfeit government obligations with the intent to defraud. 18 U.S.C. §472 (1988). The defendants present several diverse claims on appeal. After an extensive review of the record, we reverse the conspiracy convictions of all defendants. We affirm all other convictions.

BACKGROUND

IRS form 1099 is an informational form used to report to the IRS income or other compensation paid to a non-employee, such as a sub-contractor. The information contained in forms 1099 may be communicated to the IRS through the use of a single summary and transmittal form 1096. The defendants allegedly filed these forms in an effort to cause tax problems for individuals involved in repossessing real estate and other property belonging to defendants following the latter's default on various loans. The victims included creditors, attorneys, judges, sheriffs, law enforcement officials and IRS agents. Frequently, the defendants would mail copies of the forms 1099 to the individuals referenced on the forms as well as the IRS. Except for Juanita Dewey, each of the defendants charged with filing false forms 1096 or 1099 with the IRS submitted forms claiming to have paid out more than $4 million to the above described individuals. For example, George Yant filed four forms 1099 in the total amount of $28 million; Eugene Rosnow filed 103 forms 1099 totalling over $187 million; and Harry Carlson filed thirteen forms totalling over $86 million. Typically, a defendant would send an individual fictitious bills prior to filing the false forms; the logic being that the unpaid debt is essentially the same as income received to the referenced individual, and that the individual should therefore be required to pay income tax on the amount reported.

Most of the defendants are relatively uneducated farmers residing in the same geographic region in northwest Minnesota. It is a point of contention as to how they first became involved in this scheme. The plan was created by unindicted co-conspirators Roger Elvick, Natalie Telemaque and Ron Knutt, who are acquainted with Juanita Dewey. Several defendants indicated that they learned of the scheme through a book published by Elvick entitled "The Redemption Package." ³ Others claim to have learned of the scheme through various newspaper and magazine articles. Elvick, Telemaque and Knutt were convicted in a separate trial in North Dakota. ⁴ As indicated above, the defendants apparently sought a measure of revenge against those individuals who they believed had committed wrongs against them. As a result of the filings, some of the victims received audit letters from the IRS, and some incurred attorney's fees. ⁵ Additionally, the IRS found it necessary to instigate new manual procedures and hire new employees to check the veracity of the incoming forms. ⁶

IRS officials first became suspicious of the defendants' actions after noticing that an inordinate number of forms stated "request denied" in the space for the referenced individual's social security number. ⁷ Between February of 1989 and January of 1990, officials at the Kansas City IRS Service Center intercepted forms containing this notation and began forwarding these forms to the criminal investigation unit. ⁸ After checking the reported payments against the referenced individuals' reported income (usually reported in forms 1040), IRS officials discovered the amounts reported by defendants did not comport with the income reported by the individuals referred to on the forms. A criminal investigation ensued and IRS officials came to believe that the payments or unpaid debts reported by defendants were fictitious.

In March of 1990, law enforcement officers executed search warrants for the residences of six of the defendants who were thought to have sent false forms. At the condominium shared by Juanita Dewey and Melford Haugen, located in Detroit Lakes, Minnesota, a two and one-half hour search yielded a calendar indicating Dewey's acquaintance with several other defendants, correspondence between Dewey and several defendants, IRS forms, court transcripts pertaining to lawsuits of various defendants and blank counterfeit sight drafts allegedly payable out of the United States Treasury. At the Carlson farmhouse located in rural Becker, Minnesota, amongst hundreds of files unrelated to this case, investigators discovered six files each labelled with a defendant's name containing past due statements, tax forms, letters from attorneys and court documents. Apparently as a result of these searches, Carlson, Rosnow and Erickson requested the social security numbers of some of the investigators involved in the search and Dewey and Haugen filed false currency transaction reports (CTR's) ⁹ and meritless federal tort claims against the investigators. Because of these actions, the named defendants were charged with attempted obstruction of an IRS investigation.

The case proceeded to trial on March 1, 1991 . At the close of the government's case, the defendants moved for a judgment of acquittal on the conspiracy charge. The motion was denied. On April 8, 1991 , the jury returned a verdict of guilty on all thirty-four counts of the indictment. The sentences imposed range from eleven to twenty-seven months of incarceration.

DISCUSSION

Conspiracy

We initially turn to the sole meritorious claim affecting most of the defendants. The defendants argue the government failed to prove the existence of the single overall conspiracy charged in the indictment.

The government argues that all of the defendants shared the common goal of harassing their perceived enemies through the use of fraudulent claims to the IRS and that mutual assistance and dependence existed. The government maintains that Juanita Dewey and Harry Carlson each headed up a core group of defendants and the two groups were linked through various cooperative efforts.

The evidence put forth at trial included the six files discovered at the Carlson residence labeled with the names of defendants Erickson, Hansen, David Rodewald, Kermit Rodewald, Wallace Rodewald and Rosnow. ¹⁰ The files contained various tax forms, including forms 1096 and 1040, past due bill statements and notices of bills currently due. At the Dewey-Haugen condominium, investigators found notes written on a calendar which referred to defendants Haugen, Yant, Peters, David Rodewald, Kermit Rodewald and unindicted co-conspirator Knutt. Investigators also discovered letters addressed to Dewey from Morse, Telemaque ¹¹ and Knutt. Also uncovered at the Dewey-Haugen residence, was a piece of paper with Dennis and Roger Sands' address and phone number written on it and a letter addressed to the IRS from Reed Glawe, who the Sands reported having paid over $630,000.00, stating that he had not been paid any compensation from the Sands in 1989. Finally, investigators also turned up legal papers relating to adverse decisions against Hansen and Peters, which the government maintains served as the catalyst for those defendants' actions.

The government also presented expert analysis of various typewritten documents prepared by defendants indicating that Carlson, Hansen, Kermit Rodewald, Wallace Rodewald and Rosnow used the same typewriter; while David Rodewald, Haugen, Dewey, Yant, and Peters used another. Additionally, some of the defendants testified to being acquainted with each other and to having discussed the filing of the forms 1099 on occasion, ¹² and Rosnow and Erickson had accounts with Common Title Bond and Trust, a fraudulent entity whose promoters, including Harry Carlson, have been enjoined from continuing to do business by the Minnesota Attorney General. Finally, the evidence showed that several defendants functioned as notaries for the others: Kermit Rodewald notarized documents for his brother David, Rosnow, Carlson, Hansen, and Dewey; Carlson's wife, Debra, notarized documents for Rosnow, David Rodewald, Kermit Rodewald, Wallace Rodewald and Hansen; and Erickson notarized documents for Hansen.

While this evidence may show, as the government urges, that Dewey and Carlson each headed up a core group of defendants, the record belies the existence of an overall conspiracy between all of the defendants.

We recognize that in order to prove a single conspiracy it is not necessary to show that all the conspirators were involved in each transaction or that all the conspirators even knew each other. United States v. Lemm, 680 F.2d 1193 (8th Cir. 1982), cert. denied, 459 U.S. 1110 (1983). However,

[f]or a wheel conspiracy to exist those people who form the wheel's spokes must have been aware of each other and must do something in furtherance of some single, illegal enterprise. Otherwise the conspiracy lacks "the rim of the wheel to enclose the spokes." If there is not some interaction between those conspirators who form the spokes of the wheel as to at least one common illegal object, the "wheel" is incomplete, and two [or more] conspiracies rather than one are charged.

United States v. Levine, 546 F.2d 658, 663 (5th Cir. 1977) ¹³ (citations omitted); see also United States v. Fernandez, 892 F.2d 976, 986 (11th Cir. 1989), cert. dismissed, 495 U.S. 944 (1990); United States v. Castro, 829 F.2d 1038, 1045 (11th Cir. 1987). Put another way, a "common purpose of a single enterprise must motivate each participant and each act" and "mere knowledge of another similarly motivated conspiracy or an overlap in personnel do [sic] not prove one overall agreement." United States v. Snider, 720 F.2d 985, 988 (8th Cir. 1983), cert. denied, 465 U.S. 1107 (1984); see also United States v. DeLuna, 763 F.2d 897, 918 (8th Cir.), cert. denied, 474 U.S. 980 (1985); United States v. Jackson, 696 F.2d 578, 582 (8th Cir. 1982), cert. denied, 460 U.S. 1073 (1983).

The evidence shows that Haugen, Morse, Peters and the Sands brothers were associated only with Dewey; no evidence was presented that they implicitly or explicitly joined any agreement or even knew of, much less interacted with, any other defendant in this case. Nor was sufficient evidence presented to indicate an association between Wallace Rodewald and any other defendant except for Carlson and possibly his brother Kermit. ¹⁴

This case is distinguishable from the typical "chain" conspiracy case, where each member plays a different but pivotal role in the overall success of the group. For example, in the typical drug distribution conspiracy you may find a manufacturer who produces the product; a supplier who buys the contraband from the producer; distributors who buy from the supplier and sell to smaller dealers or users; and security personnel who protect the sale proceeds and see to the members' safety. Whatever the product, the purpose of the conspiracy is to put the commodity into the hands of the ultimate consumer. The success of the group as a whole is dependant upon the ability of each member to fulfill his responsibilities. Thus, unlike the wheel conspiracy, the defendants' knowledge of the existence of remote links in the chain may be inferred solely from the nature of the enterprise. See Note, Federal Treatment of Multiple Conspiracies, 57 Colum. L. Rev. 387, 390 (1957) (contrasting the knowledge requirement for "wheel" and "chain" conspiracies).

By comparison, except for Dewey who appears to have been connected with the marketers of this scheme, no member of this group stood to gain a thing by the success of a fellow defendant. Nor was any single defendant's probability of success affected by the success of another defendant. There is no evidence that the defendants were motivated by the "common purpose of a single enterprise." Snider, 720 F.2d at 988. They engaged in similar acts for similar reasons. Some were assisted by the same people. Some knew each other. But the evidence fails to indicate that there was mutual assistance or dependence between most of these defendants. See DeLuna, 763 F.2d at 918. It appears that they engaged in these actions in order to benefit themselves individually, to gain revenge on their individual perceived enemies, and not to benefit the group as a whole. They did not care about the success of the other defendants, and for the most part they did not assist the other defendants. Thus, we hold it was mere speculation for the jury to find beyond a reasonable doubt the existence of a single conspiracy between all of the defendants charged.

The existence of multiple conspiracies, however, does not necessarily require reversal of the defendants' conspiracy convictions. The issue then becomes whether the variance between the indictment and the proof presented at trial so prejudiced the defendants as to entitle them to reversal. Kotteakos v. United States, 328 U.S. 750, 765 (1945)

In Kotteakos, thirteen defendants were charged with a single conspiracy to violate provisions of the National Housing Act. The Court found the evidence at trial proved the existence of at least eight separate conspiracies, each revolving around a single individual who acted as a broker in securing federal loans based upon the peripheral defendants' fraudulent applications. In holding that the error affected defendants' substantial rights, the Court emphasized the trial court's failure to give a multiple conspiracy instruction where the "jury could not possibly have found, upon the evidence, that there was only one conspiracy." Kotteakos, 328 U.S. at 768. Not only did the erroneous instruction allow the jury to find a single conspiracy where several were proven, it also prevented the Court from giving a precautionary instruction

such as would be appropriate, perhaps required, in cases where related but separate conspiracies are tried together under §557 of the Code, namely, that the jury should take care to consider the evidence relating to each conspiracy separately from that relating to each other conspiracy charged.

Id. at 769-70 (footnotes omitted).

This court has also emphasized the importance of limiting instructions in similar situations: "When the proof at trial reveals the existence of more than one conspiracy, 'the adequacy of the trial judge's instructions are of critical importance in evaluating the likelihood [that] confusion or prejudice' resulted from transference of guilt from one conspiracy to another." Jackson, 696 F.2d at 584 (quoting United States v. Johnson, 515 F.2d 730, 735 (7th Cir. 1975)); see also Snider, 720 F.2d at 990 (finding prejudicial variance where limiting instruction not given though it "might have prevented the jury from transferring guilt properly associated with [appellant's] crimes to the [other] appellants."); cf. United States v. Griffin, 464 F.2d 1352, 1357 (9th Cir.) (trial court "placed a clamp on any possible prejudice which might have seeped from the variance" by instructing the jury that if they did not find a single overall conspiracy, they could find the defendant guilty of one of the multiple conspiracies, but only if his guilt was established on the basis of only the evidence relating to the specific conspiracy with which he was involved), cert. denied, 409 U.S. 1009 (1972).

The trial court in the instant case failed to give a multiple conspiracy instruction though the evidence proved the existence of several separate groups of conspirators. The court did admonish the jury that in order to convict a defendant of conspiracy, the evidence must show that the defendant was a member of the single conspiracy charged in the indictment and not some other separate conspiracy. However, we have held that where a single overall conspiracy could not be found on the record, "the defendants were entitled to an instruction to that effect." Jackson, 696 F.2d at 586. And where such instructions have not been given, we are obligated to give "heightened scrutiny" to the possibility "that the jury erroneously 'transfer[red] guilt from one to another and [found] defendants guilty of an overall conspiracy.' " Id. (quoting United States v. Varelli, 407 F.2d 735, 747 (7th Cir. 1969), cert. denied, 405 U.S. 1040 (1972)).

We believe the defendants here suffered from "unwarranted imputation of guilt from others' conduct," constituting a prejudicial variance on the charge of conspiracy. See Kotteakos, 328 U.S. at 777. The record is replete with evidence of inflammatory actions of individuals which, especially in light of the length and complexity of the trial, the jury could have easily applied to the group as a whole. See Jackson, 696 F.2d at 587 ("danger that evidence of the other defendants' guilt would be imputed to [defendant] was heightened by the inflammatory nature of much of the evidence presented"); United States v. Bledsoe, 674 F.2d 647, 658-59 (8th Cir.) (lengthy and convoluted presentation of evidence prejudicially impaired jury's ability to separate evidence), cert. denied, 459 U.S. 1040 (1982). ¹⁵ Here, Juanita Dewey was shown to be closely associated with Telemaque, Knutt, and Elvick, who originated and marketed the Redemption Package. The evidence indicated that Telemaque had even asked Dewey to help her launder money obtained through the scheme. Harry Carlson was shown to have promoted a fraudulent financial institution which had been enjoined from doing business by the Minnesota Attorney General. Extensive testimony was admitted regarding confrontations between Carlson, Hansen, Erickson, Peters, and David Rodewald with police officers, judges, court personnel and other respected community members. Hansen's criminal record containing a conviction for assault on a police officer and contempt of court was also revealed to the jury. The presentation of this evidence undoubtedly increased the jury's natural aversion for those who show disrespect for authority figures.

Also of critical importance in determining the question of prejudicial variance is the number of defendants involved, the number of conspiracies and the length and complexity of the trial. In distinguishing Kotteakos from United States v. Berger, 295 U.S. 78 (1934), a case of variance involving four defendants and two conspiracies, the Court observed:

The sheer difference in numbers, both of defendants and of conspiracies proven, distinguishes the situation. Obviously the burden of defense to a defendant, connected with one or a few of so many distinct transactions, is vastly different not only in preparation for trial, but also in looking out for and securing safeguard against evidence affecting other defendants, to prevent its transference as "harmless error" or by psychological effect, in spite of instructions for keeping separate transactions separate.

Kotteakos, 328 U.S. at 766-67. While noting "the Court of Appeals painstakingly examined the evidence relating directly to each of the petitioners" and "found it convincing to the point of making guilt manifest," the Court in Kotteakos held that the substantial rights of the defendants were affected: "That right, in each instance, was the right not to be tried en masse for the conglomeration of distinct and separate offenses committed by others as shown by this record." Kotteakos, 328 U.S. at 775. In the instant case, the jury sat through a trial lasting for over a month, involving fifteen different defendants, thirty-four separate counts, hundreds of exhibits and the complexities of the law of conspiracy.

Due to the number of defendants, the complexity of the issues, the failure of the court to give a limiting instruction, and the lack of overwhelming evidence of guilt, we hold the variance between the indictment and the proof presented at trial substantially prejudiced the defendants' right to a fair trial on the conspiracy count. Thus, we reverse the conspiracy convictions.

We find no merit to the related argument made by defendants Erickson, Peters, Dennis Sands, Roger Sands and Wallace Rodewald, that the district court abused its discretion in denying their respective motions for severance. Because all of the defendants were charged with a single conspiracy, the court properly ruled that the defendants could be tried jointly. See United States v. O'Connell, 841 F.2d 1408, 1432 (8th Cir. 1988) (persons charged in a single conspiracy should ordinarily be tried together), cert. denied, 488 U.S. 1011 (1989). Though the lack of a unifying count in an indictment necessitates severance of misjoined defendants, the courts "have not similarly ruled that when proof of the single conspiracy count fails as a matter of law, the defendants are entitled to severance." Jackson, 696 F.2d at 585. We now address defendants' varied contentions relating to their substantive convictions.

Admissability of Evidence

Rosnow, Carlson and Erickson contend the evidence obtained in the search of defendants' residences should have been suppressed since the search warrant was not sufficiently specific. Erickson additionally contends that the warrant affidavit contained factual inaccuracies, and Rosnow argues that the issuing magistrate judge was not neutral. ¹⁶ We find no prejudicial error. First, Erickson's objection to alleged factual inaccuracies was not raised at trial, therefore it cannot be raised now. ¹⁷ Secondly, the magistrate judge was not a victim of the scheme prior to the issuance of the warrant (Haugen and Dewey filed false documents against the magistrate judge, but not until after the search warrant was executed), therefore his impartiality is not reasonably questionable. See Gray v. University of Arkansas, 883 F.2d 1394, 1397-98 (8th Cir. 1989) (test for recusal is whether a reasonable person would question the judge's impartiality). Finally, the magistrate judge's application of the good faith exception, United States v. Leon, 468 U.S. 897 (1984), was not clearly erroneous. Although the warrant was defective in a technical sense, ¹⁸ the defect would not have been obvious to a reasonable law enforcement officer.

Sufficiency of the Evidence

All but defendants Robert Dick and Dennis Rodewald raise issues of evidentiary sufficiency in one way or another. ¹⁹ We find no merit to the argument presented by Dewey, Rosnow, Dennis Sands, Roger Sands and Yant that the government presented insufficient evidence that the false statements defendants made to the IRS were material. Materiality of a statement turns on whether the statement, or form used in this case, has the capacity to influence a government agency's action. United States v. Richmond, 700 F.2d 1183, 1188 (8th Cir. 1983). The evidence shows that filing even one of these forms may influence government action by causing the IRS to send an audit notice to the victim. The fact that most of defendants' forms were discovered before the IRS issued notices to the targeted individuals does not obviate the capability of such forms to influence the agency's functions. In addition, as noted previously, the IRS was forced to implement new procedures in order to intercept such forms.

Nor does the record support the arguments of Dewey, Erickson, Rosnow and Yant that they filed forms 1096 due to a good faith misunderstanding of the tax law. See Cheek v. United States [91-1 USTC ¶50,012 ], 111 S. Ct. 604 (1991). Rosnow filed 103 false forms 1099 in the total amount of over $187 million. He attempted to tender a $131,000 Common Title Bond and Trust sight draft, though he admitted he knew he did not have any money on account with Common Title Bond and Trust, a fraudulent entity. Erickson sent fifteen false forms 1099 in the amount of nearly $14 million, including a claimed payment of $931,000 to a deputy sheriff who did nothing more than follow a judge's order to remove Erickson from a courtroom after he refused to tell the judge his name. As explained above, Dewey appears to have been one of the instigators of the plan. She assisted several other defendants in their illegal actions and was in contact with Telemaque, Knutt and Elvick, the original marketers of the scheme. Finally, Yant filed his forms 1099 against individuals involved in a replevin action against him which took place twelve years previously. He also filed a false form 1040 seeking an $8 million refund from the United States Treasury.

Dewey misinterprets the law in arguing that her conviction for possession of counterfeit sight drafts is not supported by sufficient evidence since the "Certified Sight Drafts" purportedly payable through the Commissioner of the IRS were not actual obligations of the United States. Because the draft is purportedly payable by the Commissioner of the IRS, it can be characterized as an obligation of the United States. Buckner v. Hudspeth, 105 F.2d 393, 395 (10th Cir. 1939). Also, there is no similarity requirement for counterfeits in cases involving less recognizable instruments such as government checks and drafts. See id. (conviction affirmed where fake government check held capable of causing injury to another); cf. United States v. Ross, 844 F.2d 187, 189 (4th Cir. 1988) (reversing defendant's conviction where black and white photocopied dollar bill would not fool an honest, sensible and unsuspecting person of ordinary observation and care).

Dewey, Erickson, Haugen, Rosnow and Roger Sands maintain their obstruction convictions should be reversed because the evidence presented at trial was insufficient to show that their actions had an adverse effect on the government's investigation. Under United States v. Williams [81-1 USTC ¶9268 ], 644 F.2d 696, 699 n.14 (8th Cir.), cert. denied, 454 U.S. 841 (1981), all that is necessary is that the defendants intended to "intimidate or impede" the IRS officers. Here, the defendants' actions evince a clear intent to impede the IRS investigation which was then in progress: Rosnow and Erickson requested the social security numbers of IRS agents who were investigating the case, one of the initial steps towards filing a form 1099 against a person; Roger Sands sent false forms 1099 to IRS agents; and Dewey and Haugen filed false CTR's and federal tort claims against investigative agents.

Haugen contends the evidence does not support his alleged involvement with Dewey's preparation of the false CTR's because he did not sign the forms. We find Haugen's involvement in the frivolous federal tort claim asserted against investigative agents to be sufficient evidence to allow a reasonable jury to conclude that Haugen intended to impede the IRS investigation. ²⁰

Erickson and Kermit Rodewald argue that the evidence is insufficient to support their convictions for submitting false forms 1099 to the IRS. Erickson maintains that the government failed to prove the number of false forms that he filed and failed to prove through handwriting analysis that it was he who filed the forms. In actuality, the government introduced fifteen false forms 1099, filed by Erickson with the IRS, in the aggregate amount of over $13 million. Because Erickson stipulated that he filed the documents, handwriting analysis was not necessary.

Kermit Rodewald argues that his conviction was unsupported since the government failed to produce the actual forms which he allegedly filed with the IRS. The government, however, did produce audit notices which were sent to two of Rodewald's victims, Zenas Baer and Leonard DuChene. ²¹ These audit notices constitute evidence sufficient for a reasonable jury to conclude that Rodewald did file the forms with the IRS, since such notices could not be generated unless the IRS had received such forms.

Constitutional Claims

Dewey, Dick, Haugen, David Rodewald and Rosnow appeal from the district court's denial of their motions for self-representation. They urge that at a minimum they were entitled to an additional opportunity to engage in a colloquy with the court to establish their Sixth Amendment right to represent themselves. We hold that each of the defendants was given ample opportunity to discuss their rights with the judge. Their motion testimony did not indicate any misunderstanding about waiver of one's right to counsel; in fact, their motions actually appeared to be aimed at delaying and disrupting the trial. ²²

We find no merit to the argument made by Rosnow and Erickson that they were denied a fair trial by the distribution of a booklet of cartoons drawn by one or more defense counsel, which depicted various court personnel and defendants in an unflattering manner. No evidence was presented that the drawings, which were bound together and circulated through at least part of the courtroom, were examined by any member of the jury. Thus, we must hold that no prejudice resulted to defendants as a result of this immature, thoughtless act.

Dewey, Dick and Haugen contend that the court erred in denying their motion to disqualify the prosecutor based on an alleged interest in the outcome of the case. We disagree. Though the prosecutor was the subject of a false CTR and a federal tort claim for damages, no evidence indicated the prosecutor suffered adverse consequences due to the defendants' actions. Nor have defendants identified any prejudice resulting from the trial court's refusal to disqualify the prosecutor. See Matter of Grand Jury Subpoena of Rochon, 873 F.2d 170, 176 (7th Cir. 1989). ²³

David Rodewald argues that the district court abused its discretion and deprived him of his Sixth Amendment right to be tried by an impartial jury by not dismissing the entire jury panel after one juror asked during voir dire if the case had anything to do with the "Posse Comitatus." We find no abuse of discretion. The court dismissed the juror and ruled that the comment did not prejudice the other jurors. Even if the jurors understood what "Posse Comitatus" referred to, there was no implication in the judge's response ("I can't answer questions like that") that the defendants were members of that group. Rodewald argues his Sixth Amendment rights were also violated when the court permitted several defendants to present their closing arguments when Rodewald was absent due to illness. Since the closing arguments given in Rodewald's absence did not mention him, Rodewald was not harmed by his absence. See Snyder v. Massachusetts, 291 U.S. 97, 108 (1934) (defendant's presence is a condition of due process to the extent that a fair hearing would be thwarted by his absence and to that extent only).

Dewey, Dick, Haugen, Peters, Rosnow, Dennis Sands and Roger Sands argue that filing forms 1099 with the IRS is a form of speech protected by the First Amendment. In United States v. Citrowske [92-1 USTC ¶50,014 ], 951 F.2d 899, 901 (8th Cir. 1991), we rejected an almost identical argument, holding that First Amendment protection is "not so absolute as to protect speech or conduct which otherwise violates or incites a violation of the tax law." Thus, we find defendants' argument meritless.

Sentencing

Carlson, Dennis Sands and Roger Sands contend that they took responsibility for their actions and should receive appropriate sentencing credit. However, the record indicates that each of the defendants testified at trial and showed no remorse for their actions. Thus, we affirm the court's decision not to invoke a departure for acceptance of responsibility. See United States v. Evidente, 894 F.2d 1000, 1003-04 (8th Cir.) (lower court's findings on acceptance of responsibility should be affirmed unless without foundation), cert. denied, 495 U.S. 922 (1990).

Dewey, Peters, Dennis Sands and Roger Sands contend that the court erred in not granting them downward departures in sentencing. However, a district court's refusal to depart downward is not reviewable. Evidente, 894 F.2d at 1003-04. Dewey asserts that the court misunderstood its authority to depart downward. The sentencing transcript indicates that the court understood its authority to depart downward, but simply found no basis for exercising that authority.

Dick, Haugen, Wallace Rodewald, Dennis Sands and Roger Sands argue that the court erroneously increased their sentences under the "official victim" enhancement. Pursuant to our recent holdings in Citrowske [92-1 USTC [¶50,014], 951 F.2d at 902 and Telemaque, 934 F.2d at 171, the court's upward adjustment was not clearly erroneous. ²⁴

Miscellaneous

Erickson and Rosnow contend the district court lacks jurisdiction over Title 26 offenses. We disagree. Title 18 U.S.C. §3231 (1988), grants jurisdiction to district courts over all offenses against the laws of the United States. See United States v. Drefke [83-1 USTC ¶9354 ], 707 F.2d 978, 981 (8th Cir.), cert. denied, 464 U.S. 942 (1983). Nor do we find merit in Erickson's arguments that (1) the IRS lacked the authority to make this investigation since IRS agents are not agents of the United States government, but are agents for an alien foreign principal, the International Monetary Fund, and (2) he was denied prior notice of the illegality of his actions since the IRS has not published administrative regulations pertaining to the crimes involved in this case.

Finally, Rosnow complains certain items seized during the search of his residence, that turned out not to have evidentiary value, were not returned to him in a timely fashion. The record indicates that the delay was caused by miscommunication, not due to bad faith on the part of the government. Thus, we find this argument to be without merit.

The judgment of conviction of all defendants charged under count I, in violation of 18 U.S.C. §371 , is hereby vacated. All other convictions on all substantive counts are affirmed. The case is remanded for all defendants with the exception of Hansen and Peters to the district court for resentencing. ²⁵ Hansen and Peters were convicted only under count I. The judgments of conviction of Hansen and Peters are vacated and accordingly the actions ordered dismissed.

^* The HONORABLE BRUCE M. VAN SICKLE, Senior United States District Judge for the District of North Dakota, sitting by designation.

¹ The defendants are as follows: (1) Harry Carlson; (2) Juanita Dewey; (3) Robert Dick; (4) Leland Erickson; (5) Duane Hansen; (6) Melford Haugen; (7) Jeffry Morse; (8) Karl Peters; (9) David Rodewald; (10) Kermit Rodewald; (11) Wallace Rodewald; (12) Eugene Rosnow; (13) Dennis Sands; (14) Roger Sands; and (15) George Yant.

² Dick, Hansen and Peters were not charged with this violation.

³ Elvick also made a video explaining the scheme and several defendants indicated they had seen him give promotional speeches. Though called to testify at this trial, Elvick asserted his Fifth Amendment right in refusing to answer any questions.

⁴ This court recently affirmed the conviction of Telemaque, the only one of the three who appealed. United States v. Telemaque, 934 F.2d 169 (8th Cir. 1991).

⁵ Kermit Rodewald sent false forms to the IRS which resulted in two victims (Zenas Baer and Leonard DuChene) receiving letters from the IRS asking them to explain the discrepancy between their reported incomes and the amounts reportedly paid by Rodewald. After receiving three false forms 1099 from defendant Carlson, Frederick Kirschenmann testified that he turned the matter over to his attorney and incurred attorney's fees in the amount of $1000.

⁶ After discovering a number of false claims, the IRS began a new procedure whereby the name of the individual reporting a 1096 or 1099 payment and not reporting the referenced individual's social security number is checked against a list of people known to have submitted fraudulent forms in the past.

⁷ Though the form requests the social security number of the referenced individual, the IRS still processes forms which do not contain the number.

⁸ The defendants in this case were not the only people engaging in these acts. IRS official Patricia Calhoon testified that the Kansas City Service Center had received well over 2000 of these "questionable" forms.

⁹ A CTR is a report made to the IRS which indicates that a cash transaction of at least $10,000 has taken place.

¹⁰ We note that Carlson kept files at his house for hundreds of people not involved in this conspiracy as well.

¹¹ In one letter, Telemaque sent Dewey a check for $30 and asked Dewey to help her "launder" money obtained through the scheme. In another, she sent Dewey twelve counterfeit sight drafts which were purportedly payable through Fred T. Goldberg Jr., Office of the Commissioner, IRS, Washington, D.C.

¹² Carlson admitted to having assisted "people" in filing forms 1099. Rosnow said he discussed the scheme with defendants Erickson, Kermit Rodewald, David Rodewald and Harry Carlson. Roger Sands called Dewey for advice about the scheme. Erickson travelled to Dewey's house to watch videotapes regarding the scheme and to use Dewey's computer. Peters was a guest in the Dewey-Haugen residence, and left a signed form 1099 behind. Dewey, David Rodewald and Erickson attended a court hearing for George Yant.

¹³ In United States v. Lane, 474 U.S. 438 (1986), the Supreme Court overruled the portion of Levine that held misjoinder is per se reversible error. Lane, however, did not affect the Levine court's analysis of the requirements of a single "wheel" conspiracy.

¹⁴ Though Wallace Rodewald met with Dewey on one occasion, there is no indication that the conversation involved matters other than religion.

¹⁵ The Supreme Court's holding in Lane, see supra note 13, does not obviate our discussion of prejudice in Bledsoe since we analyzed Bledsoe in terms of harmless error despite our belief that such analysis was not required.

¹⁶ Additionally, Rosnow contends that the seizure of defendants' typewriters was unlawful because the search warrant allegedly did not list typewriters as items to be seized. We disagree. The warrant plainly specified the seizure of typewriters.

¹⁷ Erickson makes the related argument that the IRS lacked the authority to execute a search warrant on his property. We disagree. Congress has given the IRS wide authority to conduct criminal investigations, including the execution of search warrants, regarding those individuals suspected of violating tax laws. See 26 U.S.C. §7608(a)(2) (1988).

¹⁸ An accompanying document describing the particular items to be searched for was present with the warrant, but was not properly incorporated into the document.

¹⁹ Since we are reversing defendants' convictions of conspiracy, we need not address the arguments of defendants Hansen, Morse or Wallace Rodewald that there is insufficient evidence to convict them of the charged conspiracy.

²⁰ Unlike the CTR's, Haugen's signature appears on the transmittal letter accompanying the tort claims. We find no merit in Haugen's contention that this evidence is insufficient because the government did not prove by expert handwriting analysis that the signature was his.

²¹ We note that these audit notices are from the year 1988, while Kermit Rodewald allegedly filed the forms 1099 in 1989. In light of the fact that Rodewald admitted to having sent such forms in an interview with IRS agents and the amounts on the forms received by the victims matched the figures listed on the audit notice, we find this evidence sufficient.

²² Rosnow initially insisted that Whitney Tarutis be allowed to represent him. Because Tarutis was representing four other defendants, the magistrate judge held a hearing to examine the potential conflict of interest. Tarutis was then allowed to represent Rosnow, as well as the other defendants. Rosnow subsequently attempted to fire Tarutis. The magistrate judge denied Tarutis' motion to withdraw based on his finding that Rosnow's actions were initiated "to delay and disrupt the proceedings in this matter." Order, Feb. 1, 1992 , at 16.

The following exchanges are representative of the other defendants' conduct:

The Court:                           All right. Okay. Are any of you

                                     familiar with the federal rules 

                                      of criminal procedure or the 

                                      federal rules of evidence? Mr. 

                                      Haugen?

Defendant Haugen:                    I object to that.

The Court:                           Ms. Dewey?

Defendant Dewey:                     I can't answer that without 

                                      counsel.

T. Arr., 
Nov. 8, 1991
, at 31.

The Court:                           Do each of--let me advise each of 

                                      you that if you appear in this 

                                      court without a lawyer to 

                                      represent you, that you would give 

                                      up your right to challenge your 

                                      conviction if you are convicted of 

                                      any offense on the ground that you 

                                      were denied the effective                                       

                                      assistance of counsel. Do you 

                                      understand that, Mr. Haugen?

Defendant Haugen:                    I object to that question.

The Court:                           Ms. Dewey?

Defendant Dewey:                     I don't understand without 

                                      counsel, and I don't understand 

                                      why you won't tell me the 

                                      jurisdiction that we are being 

                                      tried under so we can prepare

                                      for it.

Id. at 34-35.

The Court:                           All I'm asking is do ya understand

                                       what I'm tellin' ya? Do you 

                                 understand that you have the 

                                 right to be represented by a 

                                 lawyer, and if you can't afford 

                                 one the Court will appoint one 

                                 to represent you free of

                                       charge? Do you understand that?

Defendant David

  Rodewald:                            I understand it. I really don't

                                       understand, but that's . . .

The Court:                           You don't understand?

Defendant David

  Rodewald:                            Not really.

  T. Arr., 
Nov. 15, 1990
, at 54.%

 

²³ We need not address Hansen's claim that the prosecution "planted" an incriminating document in an exhibit pertaining to him since his sole conviction is reversed by our ruling on the conspiracy count.

²⁴ Dewey, Haugen, Peters, Rosnow, Dennis Sands and Roger Sands also argue that the two-level enhancement they received for obstruction of justice on the conspiracy count constitutes double counting, because the defendants were also convicted of the crime of attempting to impede an IRS investigation. Dewey and Carlson also contend that they should not have been assessed a three-point enhancement for being leaders or organizers of the conspiracy. Because the court applied the enhancement only in relation to the conspiracy conviction, these issues are no longer before us. Similarly we need not address the contentions of defendants Wallace Rodewald, Dennis Sands and Roger Sands that the court applied the wrong section of the guidelines to set their base offense level on the conspiracy charge.

²⁵ We note that those defendants convicted of both conspiracy and any substantive count received concurrent sentences. Our remand requires resentencing on all substantive counts without regard to the now vacated count of conspiracy.

 

 

 

[92-2 USTC ¶50,501] United States of America, Plaintiff-Appellee v. Michael G. Kuball, Defendant-Appellant

(CA-9), U.S. Court of Appeals, 9th Circuit, 92-30063, 9/30/92 , 976 F2d 529, Affirming an unreported District Court decision

[Code Secs. 7206 and 7212 ]

Criminal penalties: Fraud and false statements: Interference with administration of laws: Evidence: Constitutionality.--An individual's conviction for filing false tax and information returns and for interfering with the administration of the internal revenue laws was upheld. At trial, the taxpayer failed to properly preserve the issue of whether the evidence was sufficient to support the jury's findings. Even if the issue had been properly preserved, the evidence was sufficient to permit a reasonable trier of fact to convict the taxpayer. After the taxpayer's wages and truck were seized for nonpayment of taxes, he sent letters demanding payments from a former employer, a co-worker and several IRS agents. Additionally, the taxpayer admitted that he intentionally filed false Form 1096 and Form 1099 information returns. Finally, his conduct in filing false returns and in sending letters to IRS agents and others was not protected conduct under the First Amendment's guarantee of the right to petition for redress of grievances.

Before WRIGHT, FLETCHER and CANBY, JR., Circuit Judges.

OPINION

WRIGHT, Circuit Judge: Michael Kuball was convicted of violating 26 U.S.C. §§7206 and 7212 . He filed Form 1099 information returns that falsely reported payments of over $900,000 in non-employee compensation to eight persons. He also filed a Form 1040 tax return that falsely reported income of more than $900,000 from a "default judgment" and claimed a refund of over $600,000.

He was sentenced to six months in prison and fined $600. On appeal, he argues that the evidence was insufficient to support the verdict, and that the tax filings were protected protest speech. We affirm both his sentence and conviction.

I

Kuball failed to file income tax returns from 1980 to 1988. Because the IRS was unable to collect the taxes owed, his wages and truck were seized.

He subsequently sent a series of letters and documents to his former employer, a tow truck operator, and six past and present IRS employees. His former employer had complied with the IRS' levy of his wages, and the tow truck operator had helped the IRS seize his truck. One IRS employee had arranged for the levy of his wages and the seizure of his truck. The other IRS employees' names appeared on the liens or the levies.

He sent letters to those persons, requesting their taxpayer identification numbers. The letters were followed by notices demanding payments of sums ranging from $83,484.87 to $158,272.01. He sent a second series of notices to those persons announcing that liens had been "placed against the person and property" equal to the amount of payment demanded. These notices also said that the liens had been "placed for collection with the Internal Revenue Service."

Kuball prepared Form 1099 information returns reporting that he had paid those persons sums equal to the payments he had demanded from them. He also completed a Form 1096 reporting that he had paid $927,313.29 in non-employee compensation to these individuals. In signing the form, he declared, under penalty of perjury, that both Form 1096 and the Forms 1099 were true, correct and complete. Despite this claim, Kuball had paid no money to those persons.

He also filed a 1989 tax return. He did not show any wages earned from his former job, but listed $927,373.29 as income from a "default judgment." He showed the same amount in federal income tax withheld, and claimed a refund of $667,708.76. He was neither paid nor owed such income.

II

On appeal, Kuball argues that the evidence was insufficient to prove that he intentionally falsified the information submitted on the tax forms. As the government says, he did not preserve this issue on appeal because he failed to move for a judgment of acquittal at trial. United States v. Smith, 924 F.2d 889, 893 (9th Cir. 1991).

He also failed to preserve this issue as to interference with the administration of the internal revenue laws. His motion for a judgment of acquittal, made at the close of the government's evidence, was denied. Because he failed to renew the motion at the close of his case, he "effectively waived his objection to the sufficiency of the government's evidence." United States v. Comerford, 857 F.2d 1323, 1324 (9th Cir. 1988), cert. denied, 488 U.S. 1016 (1989). The court may review the denial of a nonrenewed motion for acquittal, but only to prevent a manifest miscarriage of justice or for plain error. Id. In this case, however, we would affirm even if we were to consider the motion.

III

The evidence overwhelmingly supports the guilty verdict. We review the sufficiency of the evidence in the light most favorable to the prosecution to determine whether "any reasonable trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Adler, 879 F.2d 491, 495 (9th Cir. 1988).

"A violation of 26 U.S.C. §7206(1) is complete when a taxpayer files a return which he does not believe to be true and correct as to every material matter." United States v. Marashi [90-2 USTC ¶50,482 ], 913 F.2d 724, 736 (9th Cir. 1990). Kuball testified that no one paid him $927,373.29, and that he did not have such income. He also knew that he had not actually obtained a default judgment against any of the recipients of his demands for payment. Moreover, he admitted that he had never paid money to the purported recipients. But he filed both a tax return and information returns that reported otherwise, and signed the forms under penalty of perjury.

The evidence also supports his conviction under 26 U.S.C. §7212(a) . Section 7212(a) is aimed at prohibiting efforts to impede "the collection of one's taxes, the taxes of another, or the auditing of one's or another's tax records." United States v. Reeves [85-1 USTC ¶9190 ], 752 F.2d 995, 998 (5th Cir.), cert. denied, 474 U.S. 834 (1985). Kuball testified that the "system [did] not allow" for his former employer, the tow truck operator, or the IRS employees to be held "accountable" in the way that he wished. He hoped the threatening letters would have an effect on the recipients. He also hoped to benefit financially by obtaining a substantial tax refund.

From this evidence, the jury could find beyond a reasonable doubt that Kuball was guilty of filing false tax and information returns and interfering with the administration of internal revenue laws.

IV

Kuball contends that he filed the forms to call the government's attention to alleged mistakes as to his tax liabilities from 1980 to 1988. He says that the First Amendment protects this method of petitioning the government for redress.

Like the right to free speech, the right to petition for redress of grievances is "among the most precious of the liberties safeguarded by the Bill of Rights." United Mineworkers of America, District 12 v. Illinois State Bar Ass'n, 389 U.S. 217, 222 (1967). Yet "[t]he first amendment does not provide a defense to a criminal charge simply because the actor uses words to carry out his illegal purpose." United States v. Barnett, 667 F.2d 835, 842 (9th Cir. 1982). For example, the First Amendment does not protect defendants who go beyond mere advocacy and assist in the creation and operation of tax evasion schemes. United States v. Solomon [87-2 USTC ¶9482 ], 825 F.2d 1292, 1297 (9th Cir. 1987), cert. denied, 484 U.S. 1046 (1988). Similarly, "the desire to redress grievances . . . does not necessarily exclude a finding of a criminal violation." United States v. Citrowske [92-1 USTC ¶50,014 ], 951 F.2d 899, 901 (8th Cir. 1991). The First Amendment does not protect Kuball merely because he characterized his filing of false information and tax returns as petitions for redress.

He also chose to ignore two legal alternatives for challenging the tax laws. He could have paid the taxes allegedly due, filed a refund claim, and if denied, brought suit in federal court. United States v. Cheek [91-1 USTC ¶50,012 ], 111 S.Ct. 604, 613 (1991). He could also have challenged the government's claims of tax deficiencies in the Tax Court without first paying the tax. Id. His actions "cannot be viewed as the proper path for petitioning for redress under the rights protected by the first amendment." Citrowske [92-1 USTC ¶50,014 ], 951 F.2d at 901.

The judgment and sentence are AFFIRMED.

 

[97-1 USTC ¶50,390] United States of America, Plaintiff v. John A. Brennick, Defendant

U.S. District Court, Dist. Mass., 95-10197-NG, 11/13/95, 908 FSupp 1004, 908 FSupp 1004

[Code Sec. 7202 ]

Criminal prosecution: Civil penalties: Double jeopardy: Sufficiency of indictment: Multiplicitous counts: Failure to collect and pay over tax: Interference with administration: Obstruction.--Civil penalties assessed in connection with an individual's failure to collect and pay over taxes were reasonably related to the damages the government incurred in prosecuting the case and, therefore, did not give rise to a claim of double jeopardy. The penalties were not extreme, and they had neither a deterrent nor retributive quality to them. Further, the indictment did not contain multiplicitous counts that gave rise to double jeopardy since a violation of Code Sec. 7212 charged in the indictment entailed an intent to obtain an unlawful benefit by endeavoring to obstruct operation of the tax laws. Therefore, it involved conduct which Code Sec. 7202 did not address.

[Code Sec. 7212 ]

Criminal prosecution: Interference with administration: Unconstitutionally vague term: Notice, actions prohibited: Obstruction: Corrupt: State of mind.--An individual, who was indicted for obstruction, failing to pay over taxes, and various structuring activities, was properly charged with violations of Code Sec. 7212(a) . The term "corruptly" in the statute was not unconstitutionally vague as it applied to him because he was put on notice that the actions charged in the indictment were prohibited. The term does not limit the category of acts that obstruct or impede the IRS but, rather, it identifies the state of mind necessary for those acts to rise to the level of a felony.

[Code Sec. 7202 ]

Criminal prosecution: Sufficiency of indictment: Failure to collect and pay over tax: Willful.--An individual, who was indicted for obstruction, failing to pay over taxes, and various structuring activities, was properly charged with violations of Code Sec. 7202 . The plain language of the statute did not require both a willful failure to account and a willful failure to pay over, but rather penalizes the failure to complete the duty imposed by law: truthfully accounting for and paying over the withholding tax collected by an employer. An interpretation that required a violation of both elements would be inconsistent with any reasonable understanding of the purposes of the statute.

[Code Sec. 6531 ]

Criminal prosecution: Sufficiency of indictment: Failure to collect and pay over tax: Willful: Limitations period.--The three-year statute of limitations barred a charge under Code Sec. 7202 against an individual, who was indicted for obstruction, failing to pay over taxes, and various structuring activities. The six-year limitations period contained in Code Sec. 6531(4) was inapplicable because it was limited to the single offense of "willfully failing to pay any tax, or make any return," an offense described in Code Sec. 7203 .

[Code Sec. 6531 ]

Criminal prosecution: Interference with administration: Obstruction: Parenthetical language: Limitations period.--The six-year limitations period applied with regard to a charge under Code Sec. 7212(a) against an individual, who was indicted for obstruction, failing to pay over taxes, and various structuring activities. The six-year period applied to all actions brought under Code Sec. 7212 and not just those relating to the intimidation of officers and employees of the United States. The parenthetical language in the statute served as a cross-reference for the reader and did not limit its scope.

Stephen G. Huggard, United States Attorney, Boston, Mass. 02109, for plaintiff. Terry Philip Segal, Scott P. Lopez, Segal & Feinberg Law Office, 210 Commercial St., Boston, Mass. 02109, Robert Wolkon, Ferriter, Scobbo, Sikora, Caruso & Rodophele, One Beacon St., Boston, Mass. 02108, for defendant.

MEMORANDUM AND ORDER

I. INTRODUCTION

GERTNER, District Judge:

The defendant, John A. Brennick, is charged with nine counts of structuring financial transactions to avoid currency reporting requirements (Counts 1-9), one count of bankruptcy fraud (Count 10), twenty-two counts of failing to truthfully account for and pay over payroll taxes (Counts 11-32), and one count of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws (Count 33).

In essence, the superseding indictment charges that Brennick, who was the president of a number of health care companies, withheld payroll taxes from his employees but failed to pay them over to the Internal Revenue Service, during the period from 1986 to 1993. Instead, the indictment charges, the defendant withdrew millions of dollars from these companies through structured cash transactions designed to avoid bank reporting requirements.

The indictment also charges that defendant subsequently filed for bankruptcy on behalf of himself and one of his companies, and that he made false statements under oath during the Section 341 meeting with creditors. Finally, the indictment charges that the defendant failed to timely remit withholding taxes, made misrepresentations to the IRS concerning the reasons for his failure to pay taxes, took his pay mainly in cash, structured cash transactions to avoid bank reporting requirements, obtained separate Employer Identification Numbers for each of his separate companies, retained checks made payable to the Internal Revenue Service by his staff rather than depositing them, and diverted business assets to his personal use, all as a way of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws.

Defendant has filed motions to dismiss various of the counts. I will address each of defendants' arguments in turn.

II. DOUBLE JEOPARDY

Counts 11 through 32 charge the defendant with violating 26 U.S.C. §7202, by failing to "truthfully account for and pay over, either in whole or in part, to the Internal Revenue Service . . . federal income taxes . . . due and owing to the United States of America." Defendant contends that because he has already been assessed civil penalties in connection with these charges, the instant prosecution is barred by the Double Jeopardy Clause of the Fifth Amendment. In particular, he argues that the earlier IRS assessment of civil penalties against him constituted a "punishment" and, because the constitution prohibits multiple punishments for the same offense, the government is precluded from any further punitive action (be it civil or criminal) against him. See Halper v. United States, 490 U.S. 435, 440 (1989).

The superseding indictment charges the defendant with failing to pay approximately $1.4 million in withholding taxes, and paying late an additional $700,000 of such taxes. The IRS imposed penalties pursuant to four distinct sections of the Tax Code: (1) late deposit penalties (26 U.S.C. §6656); (2) late payment penalties (26 U.S.C. §6653): (3) late filing penalties (26 U.S.C. §6651); and (4) bad check penalties (26 U.S.C. §6657). ¹ The total amount of these penalties exceeds $600,000.

In contending that these earlier penalties constituted an imposition of punishment which bars the government from engaging in further criminal prosecution, defendant asks this court to reject the reasoning of Helvering v. Mitchell [38-1 USTC ¶9152], 303 U.S. 391 (1938), which upheld the imposition of civil tax penalties against a double jeopardy challenge. In Helvering, the government prosecuted the defendant for willfully failing to pay income tax. After the defendant was acquitted, the government imposed a civil penalty equal to fifty percent (50%) of the unpaid tax. In upholding the imposition of the penalty against a double jeopardy challenge, the court held that the civil penalty was remedial, rather than punitive, and that the Double Jeopardy Clause therefore did not apply. The court found that the penalty was imposed "primarily as a safeguard for the protection of the revenue and to reimburse the Government for the heavy expense of investigation and the loss resulting from the taxpayer's fraud." Helvering [38-1 USTC ¶9152], 303 U.S. at 401.

Helvering is directly on point. Defendant suggests, however, that two recent Supreme Court cases have called Helvering's reasoning into question. See Halper, supra; Montana DOR v. Kurth Ranch, -- U.S. --, 114 S. Ct. 1937 (1994). In Halper, the Supreme Court held for the first time that the imposition of a civil penalty could, under certain circumstances, raise double jeopardy concerns. Halper involved the imposition of civil penalties under the False Claims Act (FCA), which prohibits the making of false claims for payment from the federal government. Under the FCA, persons making false claims are subject to criminal prosecution but are also liable to the government for "a civil penalty of $2,000, an amount equal to 2 times the amount of damages the Government sustains . . . and costs of the civil action." Halper, 490 U.S. at 438.

Halper had been charged and convicted of making false Medicare claims on 65 occasions, in a total amount of $585. He was sentenced to two years in prison and fined $5,000. The government then attempted to collect a civil penalty for each of the sixty-five instances of false billing, for a total penalty in excess of $130,000. Halper contended that the penalty constituted a prohibited second punishment for the same offense of which he had been convicted. The government argued that because the penalty was a civil one, the Double Jeopardy Clause did not apply.

The Court concluded that the relevant criterion for triggering double jeopardy protection was not whether the penalty in question was characterized as "civil" or "criminal," but rather whether it was "punishment." Halper, 490 U.S. at 447-448. A civil sanction is not punishment, the Court stated, if its purpose is merely to reimburse the government for the approximate expenses it incurred because of the defendant's unlawful activity. Id. at 448. If, however, the penalty has a deterrent or retributive quality to it, then it must be considered a form of punishment, and the double jeopardy clause applies. Id.

In Halper, the district court had concluded that the government's expenses associated with Halper unlawful acts were no greater than $16,000. The Supreme Court concluded that, on those facts, the government's proposed $130,000 penalty could not be reasonably interpreted as having a solely remedial purpose; therefore, it could not be imposed consistent with the Double Jeopardy Clause. Id. at 452. The Court was careful to note, however, the anomalous facts of the case and the "small gauge" nature of the defendant's activities. Id. at 449. It reiterated that "in the ordinary case, fixed-penalty-plus-double-damages provisions can be said to do no more than make the Government whole." Id.

In Kurth Ranch, the Court once again considered the circumstances under which a civilly imposed government exaction could constitute punishment for double jeopardy purposes. At issue in Kurth Ranch was a property tax which the State of Montana imposed on possessors of marijuana. The tax was only imposed in conjunction with criminal prosecutions, and far exceeded the market value of the taxed property. The Court determined that taxes could be considered punitive under some circumstances.

The Court conceded that taxes, unlike penalties, fines and forfeitures, ² could not be classified as "punishment" merely because they had some deterrent effect, since virtually all taxes modify people's behavior to some extent. Kurth Ranch, 114 S. Ct. at 1946-1947. Taxes are assumed, however, to have primarily a revenue raising purpose. It is only when the tax is clearly intended as a punishment, and loses its character as a "normal revenue law," that the Double Jeopardy Clause applies. Id. at 1948.

In Kurth Ranch, the Court concluded that the tax in question was so unlike an ordinary tax that it could only be characterized as a form of punishment. Among the anomalous characteristics of the tax were the fact that it only applied to illegal activity, that it exceeded the actual market value of the taxed property, that it applied solely to property which had already been seized from its owner and destroyed by the government, and that it was only imposed upon the actual arrest of the taxpayer for criminal activity. Id. at 1946-1948.

Does Helvering have continuing vitality in light of Halper and Kurth Ranch? A number of factors suggest that it does. First, both the Halper and Kurth Ranch courts cited Helvering with approval, strongly indicating that the Court did not intend to overrule Helvering sub silentio. In Halper, the Court cited Helvering for the proposition that, upon a determination that a statute was intended to be remedial rather than punitive, double jeopardy principles did not apply. Halper, 490 U.S. at 442-443. Although Halper went on to use a different method from Helvering to determine whether the statute in question was punishment, it never questioned that Helvering was correctly decided. In Kurth Ranch, Helvering was cited for its assumption that a tax could, under some circumstances, violate the Double Jeopardy Clause, regardless of the nomenclature (penalty, addition to tax, assessment) used to describe it. Kurth Ranch, 114 S.Ct. at 1946, n.16. Thus in neither case is there a suggestion that Helvering was incorrectly decided, or that it would be decided differently today.

In addition, both Halper and Kurth Ranch take pains to stress the anomalous character of the penalty and the tax involved, respectively, and clearly distinguish them from "normal" cases. In Halper, the Court describes the case before it as the "rare" one, "where a fixed-penalty provision subjects a prolific but small-gauge offender to a sanction overwhelmingly disproportionate to the damages he has caused" and where the civil penalty "bears no rational relationship to the goal of compensating the Government for its loss." Halper, 490 U.S. at 449. In Kurth Ranch, the facts were equally extreme, involving a tax which had virtually none of the ordinary characteristics of a tax, but which was clearly targeted at punishing those who had already been arrested for a specific criminal offense. Kurth Ranch, 114 S. Ct. at 1948 (describing the tax as "a concoction of anomalies, too far-removed in crucial respects from a standard tax assessment to escape characterization as punishment.")

In contrast to the sanctions imposed in Halper and Kurth Ranch, the penalties at issue here are neither extreme, nor unrelated to the damage which the defendant caused to the United States. The civil penalties, all combined, amount to only twenty-three percent (23%) of the total amount of tax which defendant failed to pay, or failed to pay on time. This is less than the fifty-percent (50%) penalty at issue in Helvering. Moreover, the amount at issue here is entirely consistent with other liquidated damages provisions which the Supreme Court has found to be purely remedial. See Rex Trailer Co. v. United States, 350 U.S. 148 (1956) (upholding liquidated penalty equal to $2,000 per violation of law prohibiting purchase of government surplus property by non-qualified individuals); United States ex rel. Marcus v. Hess, 317 U.S. 537 (1943) (upholding liquidated damages penalty of double the amount of false claims plus $2,000 under same false claims provision at issue in Halper where total penalty was approximately $315,000 for false claims totaling $101,500).

In sum, Halper teaches that an administrative penalty is punishment only where it cannot be reasonably related to the damages the government incurred in prosecuting the case. Kurth Ranch teaches that a taxation scheme is punishment if it moves so far from ordinary taxation so as to lose its character as a tax. Neither of those conditions obtain here. The penalty in this case is neither disproportional to the government's damages, nor is it a clearly punitive tax. Accordingly, it is not a punishment within the meaning of the Double Jeopardy Clause. See Thomas v. C.I.R. [95-2 USTC ¶50,439], 62 F.3d 97, 99-101 (4th Cir. 1995).

III. WHETHER USE OF TERM "CORRUPTLY" IS UNCONSTITUTIONALLY VAGUE

Count 33 charges the defendant with a violation of 26 U.S.C. §7212(a), which provides:

Whoever corruptly or by force or threats of force (including any threatening letter of communication) endeavors to intimidate or impede any officer or employee of the United States acting in an official capacity under this title, or in any other way corruptly or by force or threats of force (including any threatening letter of communication) obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title, shall, upon conviction thereof, be fined not ore than $5,000, or imprisoned not more than 3 years, or both, except that if the offense is committed only by threats of force, the person convicted thereof shall be fined not more than $3,000, or imprisoned for not more than 1 year, or both. The term "threats of force", as used in this subsection, means threats of bodily harm to the officer or employee of the United States or to a member of his family. (emphasis added)

The government charges that the defendant used a series of deceptive techniques, including taking his pay in cash, setting up corporations with multiple employer identification numbers, structuring cash transactions to avoid detection, and misrepresenting the state of his finances to the IRS, in a corrupt endeavor to obstruct and impede the IRS from administering the internal revenue laws applicable to defendant's corporations. Defendant contends that the statute is unconstitutionally vague as applied to him, because the use of the word "corruptly" did not place him on notice that the acts of which he is accused were prohibited.

Constitutional vagueness challenges (other than those implicating First Amendment rights) must be considered in light of the specific facts of the case. Maynard v. Cartwright, 486 U.S. 356, 361 (1988); United States v. Powell, 423 U.S. 87, 92 (1976). A challenge for vagueness will fail if a reasonable person would have known from the language of the statute that their conduct was at risk. Maynard, 486 U.S. at 356. If the language of the challenged statute "can be made constitutionally definite by a reasonable construction . . ., this Court is under a duty to give the statute that construction." United States v. Harriss, 347 U.S. 612, 618 (1954). "[I]f the general class of offenses to which the statute is directed is plainly within its terms, the statute will not be struck down as vague even though marginal cases could be put where doubts might arise." Id.

All five of the circuit courts which have considered the issue have found a consistent and constitutional meaning for the term "corruptly" as it is used in Section 7212(a). Starting with United States v. Reeves [85-1 USTC ¶9190], 752 F.2d 995 (5th Cir. 1985), cert. denied, 474 U.S. 834 (1985), each court has determined that "corruptly" means "with the intent to secure an unlawful benefit or advantage either for oneself or for another." [85-1 USTC ¶9190], 752 F.2d at 1001; see also United States v. Bostian [95-2 USTC ¶50,596], 59 F.3d 474, 478 (4th Cir. 1994); United States v. Hanson [94-1 USTC ¶50,075], 2 F.3d 942, 946 (9th Cir. 1993); United States v. Mitchell [93-1 USTC ¶50,171], 985 F.2d 1275, 1278 (4th Cir. 1993); United States v. Yagow [92-1 USTC ¶50,167], 953 F.2d 423, 427 (8th Cir. 1992); United States v. Popkin [91-2 USTC ¶50,496], 943 F.2d 1535, 1540 (11th Cir. 1991), cert. denied, 503 U.S. 1004 (1992).

Reeves was the first case to consider the proper definition of "corruptly" in Section 7212(a). It involved the prosecution of a tax protester who had placed improper liens on an IRS investigator's house as a means of harassment. The defendant had been convicted after a non-jury trial in which the trial judge had applied a definition of "corruptly" as meaning "with improper motive or bad or evil purpose." The Fifth Circuit rejected this definition. Although it noted that a similar definition of "corruptly" had been used in cases interpreting 18 U.S.C. §1503, the jury tampering statute, it held that the use of a similarly broad definition in the tax context would render the statute unconstitutionally vague. Reeves [85-1 USTC ¶9190], 752 F.2d at 999. The court noted that jury tampering refers to an act which is almost invariably improper and which occurs in the very narrow context of a judicial proceeding. By contrast, the court reasoned, "the Internal Revenue Service is permitted great power to intrude on, and investigate virtually every aspect of economic life to effect its purpose of administering the tax laws; thus, the narrow circumstances in which section 1503 applies have no parallel in cases involving section 7212(a)." Id. at 999.

Noting its obligation to construe statutes to avoid constitutional questions where possible, id. at 999 (citing Arnett v. Kennedy, 416 U.S. 134 (1974)), the court turned to Section 7212(a)'s legislative history. That history, which was admittedly sparse, suggested to the court that the statute was intended to prohibit those acts by which the defendant acts to gain an improper advantage or benefit. ³ Since Reeves, every other court considering the issue has reach a similar conclusion. See Bostian [95-2 USTC ¶50,596], 59 F.3d at 478; Hanson [94-1 USTC ¶50,075], 2 F.3d at 946; Mitchell [93-1 USTC ¶50,171], 985 F.2d at 1278; Yagow [92-1 USTC ¶50,167], 953 F.2d at 427; Popkin [91-2 USTC ¶50,496], 943 F.2d at 1540.

Notwithstanding the uniform appellate authority as to the meaning of corruptly in Section 7212(a), defendant contends that it is vague as applied to the particular conduct alleged in this case. In support of this proposition, he relies principally on the case of United States v. Poindexter, 951 F.2d 369 (D.C. Cir. 1991), cert. denied, 113 S.Ct. 656 (1992). In Poindexter, the court held that the word "corruptly" as used in a federal obstruction of justice statute, 18 U.S.C. §1505, was unconstitutionally vague as applied to the defendant's actions. Poindexter had been President Reagan's National Security Advisor. He had been accused of lying during the course of a congressional investigation of the Iran-Contra affair and charged under 18 U.S.C. §1001 (making false statements to a government department) as well as 18 U.S.C. §1505. Section 1505 provides, in relevant part, for the criminal prosecution of anyone who "corruptly . . . influences, obstructs, or impedes or endeavors to influence, obstruct or impede . . . the due an proper exercise of the power of inquiry under which any inquiry or investigation is being had by either House [of Congress], or any committee of either House."

In a somewhat surprising decision, the court concluded that Poindexter could not be prosecuted under Section 1505 because it did not put a reasonable person on notice that lying to a congressional investigation was within the scope of the conduct it prohibited. Poindexter, 951 F.2d at 379-380. First, the court examined the plain language of the statutes and concluded that the term "corruptly influencing" a congressional investigation did not clearly encompass lying to it. Id. at 377-378. The court then turned to the statute's legislative history and found it to be ambiguous, at best. Id. at 378-384. Finally, the court considered whether the statute had been sufficiently clarified by prior judicial interpretations to give the requisite notice of what was prohibited. Although it found that some courts had held that Section 1505 applied to similar dishonest statements in other contexts, none had announced a "coherent principle for inclusion or exclusion," and therefore prior decisions had done nothing to clarify the meaning of the statute as applied to Poindexter's conduct. Id. at 384-386.

I have carefully considered the Poindexter court's analysis and conclude that its reasoning does not apply here. While I agree that the term "corruptly" is capable of multiple meanings, its meaning in Section 7212(a) has been sufficiently clarified by judicial interpretation to have placed the defendant on adequate notice of the criminality of the charged behavior.

The statute at issue in Poindexter, 18 U.S.C. §1505, is similar to Section 7212(a) in that both statutes make it unlawful to "corruptly" obstruct or impede certain types of government processes. Section 1505 goes beyond Section 7212(a), however, because it also prohibits one from corruptly "influencing" a congressional investigation. This distinction is significant. Unlike the term "obstruct" or "impede", the word "influence" does not have any inherent connotation of improperly interfering with legitimate government activity. Some actions which influence a congressional investigation are perfectly appropriate and even to be encouraged. The word "corruptly" must therefore serve to put potential defendants on notice as to exactly what types of influence are prohibited by the law. The Poindexter court concluded that in the context of the Iran-Contra hearings, lying was not clearly a type of "corrupt influence" within the meaning of the statute.

By contrast, Section 7212(a) simply prohibits "obstructing" or "impeding" the due administration of the Internal Revenue Code. These words have an inherent connotation of impropriety and thus do not need the modifier "corruptly" to put potential wrongdoers on notice as to what category of activities is covered by the statute. The use of "corruptly" in Section 7212(a) does not limit the category of acts which obstruct or impede the IRS, but rather identifies the state of mind necessary for such acts to rise to the level of a felony: intending to secure an unlawful benefit for oneself or others.

Another important distinction between Poindexter and the instant case is the history of judicial interpretation of the statute in question. The Poindexter court held that Section 1505's language had not been sufficiently clarified by prior decisions to "give the requisite notice and to protect against prosecutors, and juries who pursue their personal predilections." Poindexter, 951 F.2d at 384. By contrast, Section 7212(a) has been uniformly interpreted by five different Courts of Appeals, each of them adopting the same "coherent principle" for determining the state of mind required under the statute.

The ultimate inquiry here is whether it is possible to identify a "core" meaning to the language of Section 7212(a), and whether, having identified that meaning, it adequately put the defendant on notice that his alleged acts were prohibited. See Smith v. Goguen, 415 U.S. 566, 577-578 (1974); Poindexter, 951 F.2d at 385. I believe that the answer to this question is "yes."

Section 7212(a) prohibits those acts which "in any . . . way" "obstruct" or "impede" the IRS from carrying out the tax laws, so long as they are done either through force or threats of force, or corruptly. It is clear that the acts which the defendant is charged with committing impeded the IRS from carrying out the tax laws, as they had the effect of hiding from the IRS the extent to which and the reasons why defendant was failing to fulfill his obligation to report and pay over withholding tax to the government. A defendant committing such acts would be on notice that they could result in criminal prosecution if they were done "corruptly" within the meaning of the statute.

It is fundamental that words found in statutes should be given their ordinary meaning, absent a special statutory definition. See, e.g., Perrin v. United States, 444 U.S. 37, 41-45 (1979). Black's Law Dictionary defines "corruptly" as importing "a wrongful design to acquire some pecuniary or other advantage." Another source describes it as the adverbial form of "corrupt," meaning "depraved, evil: perverted into a state of moral weakness or wickedness . . . of debased political morality: characterized by bribery, the selling of political favors, or other improper political or legal transactions or arrangements." See U.S. v. North, 910 F.2d 843 (D.C. Cir. 1990) (quoting Webster's Third New International Dictionary 512 (1976)). Recognizing the potential vagueness problems with terms such as "depraved" "evil" and "moral weakness", courts construing Section 7212(a) have consistently chosen the former definition. See Reeves [85-1 USTC ¶9190], 752 F.2d at 1001; Bostian [95-2 USTC ¶50,596], 59 F.3d at 478; Hanson [94-1 USTC ¶50,075], 2 F.3d at 946; Mitchell [93-1 USTC ¶50,171], 985 F.2d at 1278; Yagow [92-1 USTC ¶50,167], 953 F.2d at 427; Popkin [91-2 USTC ¶50,496], 943 F.2d at 1540. It thus appears clear that, notwithstanding any doubts about the exact parameters of the word "corruptly," actions taken with the intent to gain an unlawful benefit clearly fall within its purview. "[O]ne to whose conduct a statue clearly applies may not successfully challenge it for vagueness." Love v. Butler, 952 F.2d 10, 13 (1st Cir. 1991). Accordingly, defendant's vagueness challenge must fail.

IV. WHETHER THE INDICTMENT CONTAINS MULTIPLICITOUS COUNTS

Defendant contends that the indictment contains multiplicitous counts, some of which must be dismissed in order to avoid double jeopardy problems. In particular, defendant argues that Count 33 is multiplicitous with Counts 1-9 and Counts 11-32, since the same alleged structuring of currency transactions which form the basis for Counts 1-9 and the same alleged failures to account for and pay over taxes charged in Counts 11-32, are among the factual allegations in Count 33.

This argument is without merit. The doctrine against multiplicity of charges "is based on the Double Jeopardy Clause of the Fifth Amendment, which assures that the court does not exceed its legislative authorization by imposing multiple punishments for the same offense." United States v. Nakashian, 820 F.2d 549 (2d Cir. 1987) (quoting Brown v. Ohio, 432 U.S. 161, 165 (1977)); see United States v. Lilly, 983 F.2d 300, 303-304 (1st Cir. 1992) (multiple charges under bank fraud statute multiplicitous where all related to single fraudulently obtained loan); United States v. Brandon, 17 F.3d 409, 422-424 (1st Cir.), cert. denied, 115 S. Ct. 80 (1994) (multiple bank fraud charges were not multiplicitous where they related to a series of fraudulently obtained loans). When multiple charges are brought in a single prosecution, the ultimate issue in a double jeopardy challenge is one of Congressional intent. Where Congress intended a single act to constitute multiple offenses, the Double Jeopardy Clause is not offended by multiple charges being brought in a single trial. Albernaz v. United States, 450 U.S. 333 (1981); United States v. Centeno-Torres, 50 F.3d 84, 85 (1st Cir. 1995).

Absent explicit congressional authorization of multiple punishments, courts apply the test of Blockburger v. United States, 284 U.S. 299 (1932) to determine whether Congress intended particular conduct to constitute multiple offense. See United States v. Smith, 46 F.3d 1223, 1234-1235 (1st Cir. 1995), cert. denied 116 S. Ct. 176 (1995) (money laundering and bank fraud charges not multiplicitous where they do not constitute a single offense under the test of Blockburger v. United States); United States v. Faulhaber, 929 F.2d 16, 19 (1st Cir. 1991) (applying Blockburger test to allegedly multiplicitous securities fraud, mail fraud and bank fraud charges); United States v. Serino, 835 F.2d 924, 930 (1st Cir. 1987) (applying Blockburger test to allegedly multiplicitous charges of conspiracy to commit mail fraud and mail fraud). Under Blockburger, "where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only one is whether each provision requires proof of a fact which the other does not." Blockburger, 284 U.S. at 304.

As discussed above, Count 33 charges the defendant with corruptly endeavoring to obstruct or impede the due administration of the internal revenue laws, in violation of 26 U.S.C. §7212(a). This charge requires proof that the defendant 1) corruptly, 2) endeavored, 3) to obstruct or impede the due administration of the internal revenue laws. By contrast, Counts 1-9 charge violations of the currency transaction reporting laws, 31 U.S.C. §§5313, 5322 and 5324, and require proof of willful structuring of currency transactions with a domestic financial institution for the purpose of evading currency transaction reporting requirements. Counts 11-32, which charge violations of 26 U.S.C. §7202, require proof of willful failure to account for and pay over withholding taxes.

Defendant accurately concedes that none of these charges is "technically" the same under the Blockburger test. Counts 1-9 require an intent to avoid currency reporting requirements (an element missing from Count 33), but do not entail an attempt to obstruct or impede the internal revenue laws (a necessary element in Count 33). Similarly, Counts 11-32 entail willfully failing to truthfully account for and pay over withholding taxes (an element not present in Count 33), but do not entail a corrupt intent, as does Count 33.

Defendant contends, however, that Count 33 is still multiplicitous because the allegations contained within it are "in substance" the same as those in the earlier counts. Defendant appears to be arguing, in essence, that although the counts are formally distinct, there is "no realistic likelihood of violating the narrow provision . . . without also violating the broad provision." See United States v. Seda, 978 F.2d 779, 781 (2nd Cir. 1992) (holding that indicting charging both bank fraud and making false statements to a bank was multiplicitous even though the two charges were distinct under the Blockburger test).

In Seda, a divided panel of the Second Circuit held that, Blockburger's "look-only-at-the-statute approach is inappropriate in some cases where one of the statutes covers a broad range of conduct." Seda, 978 F.2d at 781. The defendant had been charged with violating 18 U.S.C. §1014, which prohibits making false statements on a loan application to a federally insured institution, and with violating 18 U.S.C. §1344, a much broader statute, which prohibits the execution of any "scheme or artifice" to defraud a federally insured institution. Even though it was possible to conceive of a scheme in which the narrower statute, Section 1014, could be violated without violating the broader one, Section 1344, ⁴ the court held that such a possibility was "remote" and that this remoteness was sufficient to overcome Blockburger 's presumption that the two statutes were intended to create separate offenses. Id. at 781-782.

Seda has not been adopted in this Circuit, and, given the Court of Appeals consistent reference to the Blockburger test in multiplicity challenges, see Smith, 46 F.3d at 1234-1235; Faulhaber, 929 F.2d at 19; Serino, 835 F.2d at 930, I have some doubt as to whether it would be. However, even applying Seda 's holding here, I do not find the challenged counts to be multiplicitous. With respect to Counts 1-9 (relating to structuring), the issue is not even close. Structuring does not in itself involve a violation of the internal revenue laws, and it is quite easy to conceive of a realistic scenario in which currency structuring would not involve an endeavor to obstruct the internal revenue laws (for example to avoid detection of an illegal business).

The issue with respect to Counts 11-32 (relating to failure to report and pay over withholding tax under 26 U.S.C. §7202) is closer, since these counts at least involve violations of the internal revenue code. However, even here, I find that there is far more than a "remote" possibility that a violation of Section 7202 could be proven without simultaneously proving a violation of Section 7212(a). Unlike 26 U.S.C. §7201, the general tax evasion statute, Section 7202 does not involve taxes which are personally owed by defendant. The taxes at issue in Section 7202 are taxes owed by others (the defendant's employees), which the defendant is required to collect, account for, and pay over to the Internal Revenue Service. A failure to comply with Section 7202 does not, therefore, necessarily confer any unlawful benefit on the defendant. He may, for example, fail to collect the tax from his employees in the first instance out of hatred for the government or a belief that withholding taxes are immoral, thus violating the law without putting any cash in his own pocket. By contrast Section 7212(a) entails an intent to obtain an unlawful benefit by endeavoring to obstruct operation of the tax laws. This is an additional evil which Section 7202 does not address. ⁵

V. THE PROPER CONSTRUCTION OF 26 U.S.C. §7202

Counts 11-32 charge the defendant with violation of 26 U.S.C. §7202, which provides as follows:

Any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecutions. (emphasis added).

Defendant contends that the emphasized language requires that the government prove both a failure to account for and a failure to pay withholding tax to make out a violation of this statute. The government responds that the words "truthfully account for and pay over such tax" represent a unitary obligation of the defendant, the failure to do any part of which violates the statute. Although two courts have suggested in dicta that defendant's reading is the correct one, see United States v. Poll [75-2 USTC ¶9625], 521 F.2d 329, 334, n.3 (9th Cir. 1975); Wilson v. United States [57-2 USTC ¶10,040], 250 F.2d 312, 318 (9th Cir. 1958) (construing predecessor statute), there is no recent or definitive authority interpreting the language at issue here.

In construing a statute, this court's objective "is to ascertain the congressional intent and give effect to the legislative will." Philbrook v. Glodgett, 421 U.S. 707, 713 (1975). Courts must first determine whether the plain language makes its meaning reasonably clear. Negonsott v. Samuels, 113 S.Ct. 1119, 1122-1123 (1993). If the plain language is ambiguous, courts may look to the legislative history of the statute to determine its meaning. See Busic v. United States, 446 U.S. 398, 405 (1980). In interpreting a criminal statute, where no clear meaning can be discerned, the ambiguity should be resolved in favor of lenity. Id. at 406.

Ordinarily, the use of the term "or" in a statute signifies a disjunctive requirement, while "and" signifies a conjunctive one. However, this is not always the case, the ultimate meaning of these words depends on the context in which they are used. See United States v. One 1973 Rolls Rovce, 43 F.3d 794, 814-816 (3rd Cir. 1994); see also Bruce v. First Federal Savings and Loan, 837 F.2d 712, 715 (5th Cir. 1988) (interpreting "and" disjunctively); Wirtz v. Ocala Gas Co., 336 F.2d 236, 243 (5th Cir. 1964) (same); Peacock v. Lubbock Compress Co., 252 F.2d 892, 893 (5th Cir.), cert. denied, 356 U.S. 973 (1958) ("the word 'and' is not a word with a single meaning, for chameleonlike, it takes its color from its surroundings"); Union Cent. Life Ins. Co. v. Skipper, 115 F. 69 (8th Cir. 1902) (interpreting "and" disjunctively to avoid absurd result); Perfect Photo v. Grabb, 205 F.Supp. 569, 571 (E.D.Pa. 1962) ("and" can be construed as meaning "or"); United States v. Cumbee, 84 F.Supp. 390, 391 (D.Minn. 1949) (same); United States v. Mullendore, 30 F.Supp. 13, 15 (N.D.Okla. 1939) (same).

In this case, the statute penalizes those who "intentionally fail[] to . . . truthfully account for and pay over" withholding tax. The phrase "truthfully account for and pay over" is, taken by itself, unambiguously conjunctive. Somebody who was required to "truthfully account for and pay over" a tax would be required to do both things to satisfy the requirement. However, this phrase is the object of the verb "fail." The dictionary defines "fail" as "to be unsuccessful in the performance or completion of", as in "He failed to do his duty." Random House Unabridged Dictionary (1987), Def. 9. Thus, the statute appears to impose a penalty on someone who intentionally is unsuccessful in the performance or completion of the requirement--that he truthfully account for and pay over withholding tax. Under this reading, any intentional failure to complete the required task (to truthfully account for and pay over the tax) constitutes a crime. Cf. Kinnie v. United States [93-1 USTC ¶50,311], 994 F.2d 279, 283 (6th Cir. 1993) (liability exists under 26 U.S.C. §6672, the civil analogue to Section 7202, when defendant is "a responsible person" and "willfully failed to pay over the taxes due"); Purcell v. United States [93-2 USTC ¶50,460], 1 F.3d 932 (9th Cir. 1993) (liability under Section 6672 "entails showing that the individual both was a 'responsible person' and acted willfully in failing to collect or pay over the withheld taxes.").

Defendant claims that this reading of the statute is inconsistent with the holdings in Wilson and Poll. Wilson involved a prosecution under Section 2707(c) of the Internal Revenue Code of 1939, the predecessor to Section 7202. Section 2707(c) imposed criminal sanctions on any person required to collect, account for and pay over withholding tax "who willfully fails to collect or truthfully account for and pay over such tax, and any person who willfully attempts in any manner to evade or defeat any tax imposed. . . ." As in the instant case, the defendant in Wilson had collected withholding tax from his employees, had truthfully reported tax, but had failed to pay the tax over to the government. Instead the defendant had used the money to pay other expenses of his failing business. He was charged in the indictment with "failing and refusing to pay said . . . taxes withheld from the wages of employees."

The principal issue on appeal was the meaning of the statute's willfulness requirement. The court held that willfulness required more than mere knowing failure to pay the tax when funds were available to do so. Rather, the court found that willfulness entailed an intent to evade the payment of taxes. Thus, if the trier of fact found that the defendant's failure to pay tax was part of an attempt to save his business (and pay the tax later) rather than an attempt to avoid paying tax entirely, there would be no basis for conviction. Wilson [57-2 USTC ¶10,040], 250 F.2d at 324-325.

In reaching its conclusion, the Wilson court stated in dicta that, "[s]ince appellant both collected and accounted for the withheld monies, conviction under this section can be predicated only on the willful attempt to evade or defeat the payment of the taxes." Wilson [57-2 USTC ¶10,040], 250 F.2d at 318. Seventeen years later, in Poll, the court, interpreting Section 7202, relied upon this dicta to support its own dictum that the crime "require[s] two failures to act, willful failure to truthfully account and willful failure to pay over." Poll [75-2 USTC ¶9625], 521 F.2d at 334, n.3. But like Wilson, Poll did not turn on a determination of the elements of the crime, but again on the definition of "willfulness."

In Poll, the defendant not only had failed to pay over the tax but also had filed returns incorrectly stating the amount of tax he had collected. The defendant contended that Section 7202 "requires proof of both a willful failure to truthfully account and a willful failure to pay over and . . . [that] his failure to pay over [could not] be considered 'willful' " in light of his offer to prove that he intended to pay the tax later." Poll [75-2 USTC ¶9625], 521 F.2d 330-331. In particular, he argued that willfulness entailed an intent to defraud the government, and that he should have been permitted to prove that it was the financial difficulties rather than fraudulent intent, which led him to fail to pay the tax.

The court held that the crime did not entail an intent to defraud the government, but only an "evil motive" or "improper purpose." Poll [75-2 USTC ¶9625], 521 F.2d at 332-333. It found, however, that the evidence of the defendant's financial condition was relevant to this inquiry and so reversed the conviction.

Both Poll and Wilson seem to assume, without any analysis, that Section 7202 and the former Section 2707(c) require both a willful failure to account and a willful failure to pay over. I conclude, however, that when the issue is confronted directly, the only plausible reading of the plain language of the statute penalizes the failure to complete the duty imposed by law: truthfully accounting for and paying over the withholding tax collected by an employer. The alternative reading is inconsistent with any reasonable understanding of the purposes of the statute. It would result in a greater penalty for one who simply failed to collect trust fund taxes than for one who collect them and, as is charged here, used them for his own selfish purposes (arguably a more serious infraction), so long as he notified the IRS that he had collected the tax. That Congress intended to make such a distinction is simply inconceivable.

VI. STATUTE OF LIMITATIONS: SECTION 7212(A)

Defendant argues that Count 33, charging a violation of 26 U.S.C. §7212(a), should be dismissed because it alleges conduct which took place more than 3 years prior to the filing of the superseding indictment. The government responds that the applicable statute of limitations is six years, and that, in any event, part of the offense described in Count 33 occurred within 3 years of the filing of the superseding indictment.

The statute of limitations in criminal tax cases is found in 26 U.S.C. §6531. It provides generally that criminal tax proceedings must be initiated within 3 years of the offense, unless the offense falls into one of eight exceptions providing for 6 year period. One of those exceptions appears to be specifically applicable here. It provides for a six year limitation period "for the offense described in section 7212(a). (relating to intimidation of officers and employees of the United States)." 26 U.S.C. §6531(6).

Defendant contends that this provision does not apply here because the parenthetical language limits its scope only to those Section 7212(a) offenses involving intimidation of officers and employees of the United States. In support of this contention, defendant cites to an unpublished opinion in United States v. Connell, No. CR-F 94-5052 REC (E.D.Cal., February 6, 1995 ). In that case, the court held that a three year limitation period applied to Section 7212(a) offenses not involving intimidation. In reaching this conclusion the court appeared to assume that Section 6531(6) only applied to intimidation offenses. The government's argument, it seems, was that other paragraphs of Section 6531(6) also applied to bring the offense within the six year provision.

The government also relies on an unpublished decision, United States v. Workinger, CR No. 94-60023 (D.Or. January 11, 1995 ), for the proposition that Section 6531(6) does apply in this case. In Workinger, the court held that the parenthetical language in Section 6531(6) only serves as a shorthand for all of Section 7212(a). The court found that the word "relating" as used in the parenthetical language meant "to have connection or reference" and that the phrase "relating to intimidation of officers or employees of the United States" simply indicated that the statute to which the subsection referred did in fact relate to such acts.

I find that the latter interpretation is the better one. Parenthetical comments using the word "relating" are ordinarily used in statutes so that cross-references to other statutes are understandable to the reader. They do not ordinarily serve to limit the scope of the preceding language. This is apparent from the other use of a parenthetical in Section 6531. Section 6531(5) provides for a six year limitation period "for offenses described in sections 7206(1) and 7207 (relating to false statements and fraudulent documents)." This parenthetical language cannot be intended as limiting, because Sections 7206(1) and 7207 relate only to false statements and fraudulent documents. Section 7206(1) penalizes those who intentionally sign false statements under the pains and penalties of perjury, while Section 7207 penalizes those who willfully furnish false documents or false information to the IRS. It thus seems clear that the parenthetical language in this statute is not intended to limit its scope, and that the six year limitation period applies to all actions under Section 7212(a).

VII. STATUTE OF LIMITATIONS: SECTION 7202

Defendant also contends that the three year statute of limitations applies to Section 7202. The government responds that a six year limitations period is made applicable to Section 7202 by Section 6531(4), which provides for a six year limitation period "for the offense of willfully failing to pay any tax, or make any return . . . at the time or times required by law or regulations."

This dispute centers on the meaning of the word "pay." Defendant contends that the word "pay," as used in Section 6531(4), is to be distinguished from the phrase "pay over," as used in Section 7202. The first, he contends, refers to the direct obligation of a taxpayer, while the second supposedly refers to the obligation of a collection agent, such as an employer obligated to collect and pay over withholding taxes.

Defendant finds support for his position in United States v. Block [82-1 USTC ¶9256], 497 F.Supp. 629 (N.D.Ga. 1980) aff'd, 660 F.2d 1086 (5th Cir. 1980). The court in that case analyzed the language of Section 6531 and noted that each of the enumerated exceptions to the general three year limitation period referred to specific statutory provisions or tracked the language of a particular criminal tax offense. Since Section 6531(4) tracked the language of Section 7203 (relating to the intentional failure to pay any tax or make any return) but did not follow the language of Section 7202 (relating to failure to collect or account for and pay over tax), the court concluded that Section 6531(4) was not intended to refer to Section 7202. The Block court also noted that Section 6531(4) refers only to "the offense" of willfully failing to pay any tax or make any return. Since Section 7203 was "the offense" which criminalized these acts, the use of the singular in Section 6531(4) suggested that this was the only offense to which it referred.

The government's position is supported by United States v. Porth [70-1 USTC ¶9329], 426 F.2d 519, 521-522 (10th Cir.), cert. denied, 400 U.S. 824 (1970), and United States v. Musacchia [90-1 USTC ¶70,001], 900 F.2d 493 (2nd Cir. 1990), cert. denied, 501 U.S. 1250 (1991). Porth merely asserts, without analysis, that Section 6531(4) applies to Section 7202 offenses and is of little assistance here. ⁶ In Musacchia, the court considered the argument put forth in Block and rejected it. Musacchia [90-1 USTC ¶70,001], 900 F.2d at 499-500. Two factors were determinative in Musacchia. First, the court relied upon the Supreme Court's use of the term "pay taxes" in Slodov v. United States [78-1 USTC ¶9447], 436 U.S. 238 (1978). Musacchia [90-1 USTC ¶70,001], 900 F.2d at 500. In Slodov, the court held that the term "any person required to collect, truthfully account for, and pay over any tax" as used in 26 U.S.C. §6672, the civil analogue to Section 7202, was meant to limit the applicability of the section to persons required to collect tax from third parties and pay it over to the government, and was not intended to limit its scope to persons who were personally in a position to perform all three functions in a particular firm. Slodov [78-1 USTC ¶9447], 436 U.S. at 246-250. In particular, the Court stated that:

[the limiting language] was necessary to insure that the penalty provided . . . would be read as applicable only to failure to pay taxes which require collection, that is third-party taxes, and not failure to pay 'any tax imposed by this title,' which, of course, would include direct taxes.

Id. at 249. Since Slodov used the phrase "to pay" interchangeably with "pay over" as used in Section 6672, the court in Musacchia concluded that the terms must mean the same thing in Sections 6531 and 7202. The Musacchia court also concluded that it would be highly unlikely that Congress would have intended to impose a six year limitations period for offenses under Section 7203, a misdemeanor, and only a three year period for offenses under Section 7202, a felony.

I find defendant's argument more compelling. Section 6531(4) plainly refers only to a single offense, an offense which is clearly described by the language of Section 7203. The Supreme Court's use of the terms "pay" and "pay over" interchangeably in Slodov does not appear to have been intended to express an opinion about the meaning of these terms as used in the statutes at issue here. It appears rather to have been a stylistic choice, avoiding the need to use the awkward phrase "pay over" twice in one sentence.

In any event, Section 6531(4) refers to "the offense of willfully failing to pay any tax, or make any return." Section 7202 does not describe an offense of failing "to make any return" but rather of intentionally failing "to collect, account for, and pay over" tax. Thus even under the broader reading of "pay" in Section 6531(4), it still does not refer to the offense of failing to "collect" withholding tax described in Section 7202.

In sum, I find that Congress has expressed its will "in reasonably plain terms," Negonsott, 113 S. Ct. at 1122-1123, and that Section 6531(4) applies only to "the offense" described in Section 7203. Notwithstanding any speculation as to Congress' motives in imposing a longer limitations period on a misdemeanor than on a felony, this plain reading of the statute is conclusive. Id. Accordingly, defendant's motion to dismiss Count 11, which charges a Section 7202 offense on July 31, 1992 , ⁷ is ALLOWED.

VIII. CONCLUSION

For the foregoing reasons, defendant's motion to dismiss Count 11 on statute of limitations grounds is ALLOWED. Defendant's remaining motions to dismiss are all DENIED. SO ORDERED.

¹ Defendant also contends that he was informed that the IRS intended to impose a 100% penalty on Counts 21 and 32 for failing to truthfully account for and pay over trust fund taxes under 26 U.S.C. §6672. The government states, however, that it did not, and does not intend to, impose this particular penalty on defendant.

² In Austin v. United States, -- U.S. --, 113 S. Ct. 2801 (1993), the Court had determined that civil drug forfeitures under 21 U.S.C. §881 were punishment for the purposes of the Eighth Amendment's excessive fines clause.

³ The court referred to the Senate report on Section 7212, which stated, in part, that "this section provides for the punishment of threats or threatening acts against agents of the Internal Revenue Service . . . on account of the performance by such agents . . . of their official duties. This section will also punish the corrupt solicitation of an internal revenue employee." The court concluded its definition of "corruptly" should only criminalize those acts "substantially similar in result to the offenses expressly mentioned." Reeves [85-1 USTC ¶9190], 752 F.2d at 1000-1001.

⁴ Section 1014, but not Section 1344, would be violated where the defendant intentionally understated his income in order to induce a bank to deny a loan application, so that the defendant could avoid performing under a real estate purchase and sale agreement.

⁵ It is also notable that Section 7202 specifically provides that its penalties are "in addition to other penalties provided by law."

⁶ Porth also cites to a string of cases in support of its position. None of them, however, holds that Section 6531(4) applies to Section 7202 offenses. See Waters v. United States [64-1 USTC ¶15,561], 328 F.2d 739 (10th Cir. 1964); United States v. Gase [66-1 USTC ¶9288], 248 F.Supp. 704 (N.D.Ohio 1965); United States v. Doelker [63-1 USTC ¶9239], 211 F.Supp. 663 (N.D.Ohio 1962); United States v. Alper [62-1 USTC ¶9164], 200 F.Supp. 155 (D.N.J. 1961); United States v. Tiplitz [52-2 USTC ¶9477], 105 F.Supp. 512 (D.N.J. 1952).

⁷ The indictment was filed on August 22, 1995 .