Materiality and Corruptly in Tax Obstruction under Section 7212(a) (9/10/11)

In United States v. Bonds, 2011 U.S. Dist. LEXIS 96051 (ND CA 2011), the jury had found Barry Bonds guilty of obstruction of justice in violation of the so-called Omnibus Clause of 18 U.S.C. section 1503. The court rejected Bonds' Rule 29 for acquittal and Rule 33 for new trial. The Court's discussion is interesting for tax crime afficionados because the tax obstruction statute, section 7212(a), has its roots in the general obstruction statutes in 18 U.S.C., including specifically section 1503(a)'s Omnibus Clause. See John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough, 9 Hous. Bus. & Tax. L.J. 255, 277-314 (2009), here.

The key elements of 1503's Omnibus Clause for present purposes are: (i) the defendant must endeavor (ii) corruptly to (iii) obstruct or impede the due administration of justice. The Court has the obligatory discussion of the leading case, United States v. Aguilar, 515 U.S. 593, 598 (1995), which is fascinating but need not detain us here.

I cut and paste the relevant portions of the opinion that I want to explore here (footnotes omitted):

Although the omnibus clause proscribes both obstruction and the "endeavor" to obstruct, the scope of the clause is not unlimited. It requires not only that "the defendant act[] with an intent to obstruct justice," even if he "is foiled in some way"; but also that the defendant act "in a manner that is likely to obstruct justice." Id. [Aguilar] at 601-02. "In other words, the endeavor must have the natural and probable effect of interfering with the due administration of justice." Id. [Aguilar] at 599-600 (internal quotation marks omitted). * * * *

Thus, materiality is an implicit element of section 1503. See United States v. Thomas, 612 F.3d 1107, 1128-29 (9th Cir. 2010); see also United States v. Ryan, 455 F.2d 728, 734-35 (9th Cir. 1972) (holding that "the acts complained of" as the basis for an obstruction charge under section 1503 "must bear a reasonable relationship to the subject of the grand jury inquiry"). A statement that is material under 18 U.S.C. section 1623(a) [perjury statute] is material under 18 U.S.C. section 1503. See Thomas, 612 F.3d at 1129 & n.8 (upholding verdict of guilt under 1503, even though the jury was not instructed that the obstructionist statement needed to be material, because, when considering the false statement charge, the jury independently found that the obstructionist statement was material). In order to be material under section 1623(a), a false statement need only be "relevant to any subsidiary issue under consideration." United States v. McKenna, 327 F.3d 830, 839 (9th Cir. 2003). "The government need not prove that the perjured testimony actually influenced the relevant decision-making body." Id.

Defendant argues that the jury's guilty verdict cannot stand because section 1503 does not proscribe obstructing justice by means of truthful but evasive answers. It is true that the parties have pointed to no reported decisions reviewing such a conviction. However, at least one federal district court has concluded "that literally true but evasive and misleading testimony" would support a conviction for obstruction under section 1503. See United States v. Remini, 967 F.2d 754, 755 (2d Cir. 1992) (describing a trial court ruling in United States v. Gambino (Thomas), 89-CR-431 (E.D.N.Y.) (Jack B. Weinstein, J.)). Additionally, with regard to 18 U.S.C. section 1505, which uses nearly identical language to proscribe obstruction of administrative proceedings and legislative inquiries and investigations, the D.C. Circuit has explained that "literal truth may not be a complete defense to obstruction," because "[e]ven a literally true statement may be misleading." See United States v. Safavian, 528 F.3d 957, 968 (D.C. Cir. 2008); see also United States v. Browning, 630 F.2d 694, 699 (10th Cir. 1980) ("Literal truth is not the test here.").

There are two key points from the above that might and even should apply in Omnibus Clause tax obstruction cases under section 7212(a):

First, the obstructive conduct undertaken or endeavored must be material -- that it must have the natural and probable effect of obstructing the administration of the tax laws. I discuss this in my article above at pp. 356-7. This is an objective standard.  There are many acts that are undertaken or endeavored, even corruptly, but that do not have the natural and probable effect of obstructing. The Government should have to prove beyond a reasonable doubt that the alleged obstruction as the natural and probable effect of the undertaken or endeavored conduct.

Second, courts may be inclined, at least in the Title 18 obstruction statutes, to treat truthful testimony (or statements) that are intended to be evasive as punishable under the Omnibus Clause. I think this is a slippery slope.  In this regard, however, the defendant's undertaken or endeavored conduct must be corrupt (as well as material). So the Government will still have to prove beyond a reasonable doubt that the defendant intended through the truthful answer to be evasive. In the grand jury testimony case where the defendant is being cross-examined by a Government prosecutor, I think the courts should be wary of finding that the testimony was criminally evasive if truthful. See Bronston v. United States, 409 U.S. 352 (1973) (involving perjury). Of course, courts will likely be sensitive to this concern, but juries may not be sensitive and the question is whether the defense can develop the basis for the argument and maybe even get some jury instruction to caution the jury about finding the required corrupt endeavor to evade in literally true answers to the questions the prosecutor asked but then did not properly follow through.

For my previous blog on the Bonds case, see my blog Barry Bonds Swings at the Obstruction Charge but Doesn't Hit This Time (2/26/11), here.

For my previous blog on the Thomas case cited prominently by the court, see my blog The Limits of Literal Truth as Defense to Perjury (or Even 18 USC 1001) (7/24/10), here.