Friday, March 4, 2011

Petitions for Cert in US v. Pfaff, Ruble & Larson

Petitions for certiorari have been filed in the criminal convictions of John Larson, Robert Pfaff and R.J. Ruble in the massive KPMG-related criminal case which drew fame in an earlier iteration (United States v. Stein before 13 defendants were dismissed for prosecutorial abuse). The Second Circuit summary affirmance of the convictions of Larson, Pfaff and Ruble is here. The petition for John Larson and Robert Pfaff is here. The petition for R. J. Ruble is here..

The questions presented in Larson and Pfaff's petition are:

Petitioners were convicted of tax evasion for their role in the background mechanics of a tax-minimization strategy. The government’s theory was that the transactions involved fail the judicially-created “economic substance” doctrine. Petitioners did not give anyone tax advice, and did not prepare or review any investor’s returns but their own.

Under this Court’s precedents, a tax evasion conviction requires a “voluntary, intentional violation of a known legal duty.” Cheek v. United States, 498 U.S. 192, 201 (1991). At the time of the conduct at issue (and still today), the requirements of the economic substance doctrine and its application to criminal prosecutions were objectively unclear and therefore unknowable. And the federal tax evasion statute, 26 U.S.C. §7201, had never been interpreted to permit conviction for the alleged evasion of others’ taxes, where the defendant was so far removed from the relevant taxpayers’ returns.

The Second Circuit’s affirmance of these convictions presents two questions meriting review:

1. Whether a defendant can be guilty of voluntarily and intentionally violating a known legal duty when the governing law is objectively unclear.

2. Whether for ten of the twelve counts of conviction petitioners’ conduct was too remote from the taxpayers’ returns to be charged under 26 U.S.C. §7201.
The questions presented in R.J. Ruble's petition are:

1. Whether a criminal defendant can be guilty of tax evasion where the governing tax law is objectively unclear. Cheek v. United States, 498 U.S. 192 (1991).

2. Whether Ruble could legally be convicted of tax evasion under 26 U.S.C. §7201 where his conduct consisted largely of the drafting of opinion letters and was remote from the preparation of the tax returns of the taxpayers at issue.

3. Whether the Second Circuit deviated from well-established law by upholding Ruble's conviction in spite of the fact that the evidence failed to establish that Ruble knew that the tax transactions at issue lacked economic substance, no matter how that vague concept is defined.
I have reported above, to quote Joe Friday, "just the facts" of the petitions and the questions presented. Much can be said about the underlying arguments and chances for certiorari, and I will likely say something about them later (either in comments here or in new blogs).

Links to the Supreme Court dockets for the cases are: Larson & Pfaff and Ruble.


  1. Check out the certiorari petition of Wesley Snipes. Much there to blog about; he says defendant gets a mini trial on venue before the real trial and venue burden of proof is beyond a reasonable doubt, bucking all appellate law.

  2. Ok, so I have run out of patience waiting for Mr. Ruple's missive! Can you give us your thoughtful take on this Jack? Oh, and have these guys been disbarred or dis-CPA'ed (or whatever the penalty is for accountants if any)?


Please make sure that your comment is relevant to the blog entry. For those regular commenters on the blog who otherwise do not want to identify by name, readers would find it helpful if you would choose a unique anonymous indentifier other than just Anonymous. This will help readers identify other comments from a trusted source, so to speak.