Saturday, July 23, 2011

Is FBAR Venue Criminal Venue for the Convenience of the Government or in No District for the Convenience of the Filer? (7/23/11)

In United States v. Bradley, ___ F.3d ___, 2011 U.S. App. LEXIS 13260 (11th Cir. 13260), a decision of considerable length (195 pages), the Court addressed inter alia, venue in a case involving an FBAR violation. In a nutshell, the FBAR form permits filing at the Detroit Service Center or any IRS office. There is no special venue provision for FBAR charges, so the general rule applies which makes venue in any district where the crime was committed. Since the filer could file in any district, does that make his or her failure to file a crime that occurred in any district, giving the Government choice of any venue? Without deciding whether that sweeping opportunity for venue choice was available to the Government at its whim, the Court sustained venue for the FBAR charges based on the district court's inquiry into the convenience of that district for trial of the charges, even though the defendant resided elsewhere. 

I have linked the opinion above, but because of its length, I am just cutting and pasting it below for readers' easier access (pp. 56-60 of the pdf slip opinion):

Count 284 alleged that Bradley III failed to disclose an interest in a foreign financial account while committing mail fraud, wire fraud, and money laundering, in violation of 31 U.S.C. §§ 5314 and 5322(b). Section 5314 authorizes the Secretary of the Treasury to require a taxpayer to keep records and file reports "when th[at] resident, citizen, or person makes a transaction or maintains a relation for any person with a foreign financial institution." 31 U.S.C. § 5314(a). The Secretary has exercised that authority by requiring all persons subject to the jurisdiction of the United States to disclose whether he or she has "an interest in, or a signature or other authority over, a bank, securities or other financial account in a foreign country." 31 C.F.R. § 103.24(a). If a person owns such an account, he is obligated by 31 C.F.R. § 103.24 to file Form 90-22.1 with "the Commission of the Internal Revenue." That form instructs the person that the filing may be accomplished "by mailing this report to the Department of the Treasury . . . or by hand-carrying it to any local office of the Internal Revenue Service for forwarding to the Department of the Treasury" in Detroit, Michigan.

Section 5322(b) prescribes criminal penalties for any person who "willfully" violates § 5314 by failing to disclose a financial interest in a foreign financial institution while also "violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period." 31 U.S.C. § 5322(b). Count 284 alleged that, during calendar year 1999, Bradley III had such a financial interest in a bank account that had an aggregate value of over $2,000,000 and that he willfully failed to report this while committing mail fraud, wire fraud, and money laundering as part of a pattern of illegal activity.

Venue, in a criminal case, is constitutionally proper only in the district where the crime was committed. U.S. Const. art. III, § 2, cl. 3; U.S. Const. amend VI. The Federal Rules of Criminal Procedure echo that sentiment: "Unless a statute or these rules permit otherwise, the government must prosecute an offense in a district where the offense was committed." Fed. R. Crim. P. 18. In the venue context, the failure to perform a legally required act occurs where the act is supposed to be performed. United States v. DiJames, 731 F.2d 758, 762 (11th Cir. 1984) (citing Johnston v. United States, 351 U.S. 215, 220, 76 S. Ct. 739, 742, 100 L. Ed. 1097 (1956)). Failure to file a mandatory report is therefore committed in the district or districts where the report is to be filed. See, e.g., United States v. Quimby, 636 F.2d 86, 90 (5th Cir. 1981); see also United States v. Clines, 958 F.2d 578, 583 (4th Cir. 1992) (citing United States v. Garman, 748 F.2d 218, 220-21 (4th Cir. 1984)).

Because there is no dispute that Bradley III had a qualifying interest in a foreign financial institution under 31 U.S.C. § 5314, he was required under the applicable regulation to disclose that interest on his tax return and file a form with the IRS. The form in question, Form 90-22.1, could be filed either by mailing it to the IRS in Detroit, Michigan, or by hand-delivering it to any local IRS office. Bradley III claims that, because he never delivered the form as required, venue was properly laid only in Detroit (the Eastern District of Michigan) or his district of residence (the Southern District of Florida). Relying upon the Fourth Circuit's reasoning in Clines, the Government answers that the option of filing Form 90-22.1 in "any local office" was sufficient to establish venue in the Southern District of Georgia.

The Government's reliance on Clines is not misplaced. There, facing seemingly identical circumstances, the Fourth Circuit determined that venue was properly laid in the district where Clines's tax returns were prepared. Clines, 958 F.2d at 583. The court's opinion was, as here, based on the "any local office" provision of Form 90-22.1. Id. at 584. Dismissing Clines's worries that its ruling would create unlimited venue possibilities, the court noted that it saw "no evidence that the Government engaged in forum shopping," id. at 583 n.3, and reasoned that its "conclusion is consistent with the principal concern the courts have advanced as underlying the constitutional venue provisions," id. at 583. As such, the Fourth Circuit came to the conclusion that "venue in [the District of Maryland] did not impermissibly offend Clines's rights guaranteed by the Sixth Amendment." Id. at 584.

Likewise, the possibility that Bradley III would have filed the form in the Southern District of Georgia, the district where his returns were prepared and home to a local IRS office, n81 was sufficient to establish venue in that district. Form 90-22.1 permits filing in "any local office," meaning that there is no absolute requirement that it be filed in any particular place; the sole requirement is that it be filed somewhere. Thus, for purposes of venue, the form is "required" to be filed in any and every district that houses a local IRS office. So long as its choice does not create a constitutional hardship, n82 the Government may choose, from among those districts, one where it is most convenient to pursue an indictment. See id.
n81 We take judicial notice that Savannah is home to a local IRS office. See Fed. R. Evid. 201(b) (permitting courts to take judicial notice of facts known within the court's jurisdiction and which are easily identifiable).
n82 Presumably, the Government may choose any district that would not be unfair to the defendant or create a hardship. See United States v. Clines, 958 F.2d 578, 583 (4th Cir. 1992) (citing United States v. Cores, 356 U.S. 405, 407, 78 S. Ct. 875, 877, 2 L. Ed. 2d 873 (1958)). Other considerations might include the location of witnesses and evidence. See Cores, 356 U.S. at 407, 78 S. Ct. at 877. As Bradley III cannot establish that venue was improper in the Southern District of Georgia as to Counts 1 through 283, he cannot establish that venue on Count 284 was constitutionally inconvenient.
Moreover, in its order denying the defendants' pretrial joint motion to transfer venue to the Southern District of Florida, the district court analyzed the factors set out in Platt v. Minnesota Mining Co., 376 U.S. 240, 84 S. Ct. 769, 11 L. Ed. 2d 674 (1964), and held that "[b]oth judicial and litigant economies" favored "venue here in the Southern District of Georgia." As for Bradley III, the court noted that he had "significant family ties to Savannah" and that he could easily operate his business there. The court tempered those findings with the realization that Bradley III lived and worked in Miami and that his wife had recently been diagnosed with breast cancer. Nevertheless, the court satisfied itself that the Government's witnesses and the defendants' lawyer could easily reach the city, that all of the Government's documentary evidence was stored nearby, and that the court's docket was sufficiently clear to handle such a "mega-trial."

Here, the district court determined that the district was not inconvenient to Bradley III. We agree and further find that the Southern District of Georgia did not create a constitutional hardship. As such, we hold that venue was properly laid in the Southern District of Georgia and that the district court did not err in denying Bradley III's motion for a judgment of acquittal.

Finally, as a conceptual matter, Bradley III's interpretation is far too restrictive. He would have this court decide that, as a constitutional matter, a defendant could dictate venue by failing to file the very form he was required to submit. The implication of Bradley III's position is that he could defeat jurisdiction [JAT note: venue?] in any district other than the two he has previously named by proclaiming he never would have submitted the form there. That simply cannot be the case.


  1. So if you are one of 5 million American Citizens living in foreign countries and the Feds decide to take a criminal FBAR case against you, where exactly do they plan to try such a case? If the Sixth Amendment says it must be "by an impartial jury of the State and district wherein the crime shall have been committed", how would they ever be able to try you, since you live outside of any district and opened up the account and committed the alleged crime (failure to file FBAR) in no district of the United States.

    Let's just consider the matter of inconvenience. Let's imagine a US person lives in Belgium, and is charged with criminal FBAR because they own a bank account with $10,000 that they allegedly wilfully refused to file an FBAR. How is it fair to try the that person in Georgia or anywhere else? Would that not present a hardship for them?

  2. I suppose they could charge the case in the district of the IRS Service Center in Detroit where the FBAR should have been filed.  Certainly, since there is no other district with ties to the defendant or the particular failure, that district is more logical than any other and, excending the case discussed, that would be the district where the crime would be charged.

    What brought me back here today was researching the issue of where an FBAR civil penalty suit would be filed against a person who is not a resident of the United States.  As best I understand the answer to that question, 28 USC Section 1391(c)(3) would allow venue any district.  But, I would think, rather than believing that that provision gives it unlimited right to pick the best court for the FBAR suit, the Government would choose some logical forum, such as in this context, the district court for the district wherein the IRS Detroit Service Center is located.

    And, in a civil context, there is always the possibility of a forum nonconveniens transfer of venue to another district upon the defendant making the proper showing.

    Jack Townsend

  3.  Jack

    Would this be impacted by the outcome of the Williams case ? Depending on whether the outcome is favorable to it or not, the government could pick a court in that circuit or not ..


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