Coplan #3 - Venue for False Statements (18 USC 1001) (12/3/12)

This is the third in the series on the major and lengthy opinion in United States v. Coplan, et al., 703 F.3d 46 (2d Cir. 11/29/12), here and here (bookmarked version).  Venue is the topic of this blog.

One of the defendants, Vaughan, challenged venue for the false statement count (18 USC 1001, here) in the Southern District of New York, DOJ's preferred venue for the mega tax shelter trials) rather than in Tennessee where he made the statement.  The key facts are that the statement was made in Tennessee but worked its way to SDNY where the agents considered the statement in the investigation being conducted in SDNY.  Essentially, the Court held that the false statement crime can be committee wherever the statement is properly considered, so that venue can be in the district where the statement is made and the district where the statement is considered.

I thought I would just cut and paste the major portion the discussion of venue for those not familiar with some of the venue concepts (some case citations omitted and some footnotes omitted):

Because "[p]roper venue in criminal proceedings was a matter of concern to the Nation's founders," the United States Constitution "twice safeguards the defendant's venue right." United States v. Cabrales, 524 U.S. 1, 6 (1998). Article III requires that "the Trial of all Crimes . . . shall be held in the State where the said Crimes shall have been committed." U.S. Const. art. III, § 2, cl. 3. The Sixth Amendment further provides that "[i]n all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed." Id. amend VI; fn31 see also Fed. R. Crim. P. 18 (requiring that "the government must prosecute an offense in a district where the offense was committed"). 

  fn31 "Technically, Article III specifies 'venue' and the Sixth Amendment specifies 'vicinage,' but that refined distinction is no longer of practical importance." United States v. Royer, 549 F.3d 886, 893 n.8 (2d Cir. 2008).

When the relevant federal statute does not specify how to determine the location where the crime was "committed," "[t]he locus delicti must be determined from the nature of the crime alleged and the location of the act or acts constituting it." Cabrales, 524 U.S. at 6-7. In conducting this inquiry, we "must initially identify the conduct constituting the offense . . . and then discern the location of the commission of the criminal acts." United States v. Rodriguez-Moreno, 526 U.S. 275, 279 (1999). "Venue is proper only where the acts constituting the offense—the crime's 'essential conduct elements'—took place." United States v. Tzolov, 642 F.3d 314, 318 (2d Cir. 2011) (quoting Rodriguez-Moreno, 526 U.S. at 280). 

"When a crime consists of a single, non-continuing act, the proper venue is clear: The crime is 'committed' in the district where the act is performed." United States v. Ramirez, 420 F.3d 134, 139 (2d Cir. 2005) (other internal quotation marks omitted). In other cases, "where the acts constituting the crime and the nature of the crime charged implicate more than one location, the Constitution does not command a single exclusive venue." United States v. Magassouba, 619 F.3d 202, 205 (2d Cir. 2010) (internal quotation marks and alterations omitted). Congress has codified the so-called "continuing offense" rule in 18 U.S.C. § 3237(a), which provides in relevant part: 

Except as otherwise expressly provided by enactment of Congress, any offense against the United States begun in one district and completed in another, or committed in more than one district, may be . . . prosecuted in any district in which such offense was begun, continued, or completed. 

 * * * * 

We begin by identifying the "essential conduct elements" of § 1001(a)(2).  Rodriguez-Moreno, 526 U.S. at 280. In United States v. Ali, 68 F.3d 1468 (2d Cir. 1995), amended on denial of reh'g, 86 F.3d 275 (2d Cir. 1996), we held for the first time that materiality is a statutory element of all charges under § 1001. Ali, 68 F.3d at 1474-75; see United States v. Mandanici, 205 F.3d 519, 523 (2d Cir. 2000). Thus, in order to secure a conviction under § 1001(a)(2), the Government must prove that a defendant (1) knowingly and willfully, (2) made a materially false, fictitious, or fraudulent statement, (3) in relation to a matter within the jurisdiction of a department or agency of the United States, (4) with knowledge that it was false or fictitious or fraudulent. fn33 

   fn33 Since Ali, we have occasionally stated the elements of a § 1001 false statements charge without mentioning the materiality element. See, e.g., United States v. Wiener, 96 F.3d 35, 37 (2d Cir. 1996) ("To convict a defendant of violating Section 1001, the government must prove that the defendant: (i) knowingly and willfully, (ii) made a statement, (iii) in relation to a matter within the jurisdiction of a department or agency of the United States, (iv) with knowledge that it was false or fictitious and fraudulent."). In light of our explicit holding that "materiality is indeed an element of the offense," Ali, 68 F.3d at 1475, our subsequent failure to incorporate materiality into our standard recitation of the statutory elements of § 1001 appears to be the result of a simple oversight. 

But not all statutory elements constitute "essential conduct elements" within the meaning of Rodriguez-Moreno. In reviewing the elements of § 1001, the Supreme Court has noted that the statutory requirement that the false statement be made "in any matter within the jurisdiction . . . of the United States" is "jurisdictional language [that] appears in a phrase separate from the prohibited conduct" and is simply a "predicate circumstance" of the offense. United States v. Yermian, 468 U.S. 63, 68-69 (1984) (quotation marks omitted). Similarly, the mens rea requirement constitutes "a circumstance element that does not contribute to determining the locus delicti of the crime." United States v. Oceanpro Indus., Ltd., 674 F.3d 323, 329 (4th Cir. 2012). fn34 Thus, the essential conduct prohibited by § 1001(a)(2) is the making of a materially false, fictitious, or fraudulent statement. 

    n34 Cf. United States v. Clenney, 434 F.3d 780, 782 (5th Cir. 2005) (holding that the intent element of the parental kidnapping statute, 18 U.S.C. § 1204, "merely speaks to the offender's mens rea as he commits the conduct essential to the crime; it is plainly not an 'essential conduct element' as required by Rodriguez-Moreno"); Ramirez, 420 F.3d at 144 ("While a scheme to defraud is certainly one of three essential elements of mail fraud, it is not an essential conduct element. . . . It is the mens rea element of mail fraud."); United States v. Bowens, 224 F.3d 302, 313 (4th Cir. 2000) (holding that language "defin[ing] the requisite intent for the offense" of harboring a fugitive, 18 U.S.C. § 1071, was not an essential conduct element). 

In this case, the materiality requirement proves dispositive with respect to venue. "Under § 1001, a statement is material if it has a natural tendency to influence, or be capable of influencing, the decision of the decision-making body to which it was addressed, or if it is capable of distracting government investigators' attention away from a critical matter." United States v. Adekanbi, 675 F.3d 178, 182 (2d Cir. 2012) (internal citations, quotation marks, and alterations omitted). Accordingly, whether Vaughn's false statements were material turns on the tendency or capacity of those statements to influence the decision-making body at issue—in this case, the IRS. 

Proving the materiality of Vaughn's false statements in Tennessee necessarily requires evidence that those statements were conveyed to or had an effect on the IRS investigators working in the Southern District of New York. Oceanpro, 674 F.3d at 329; see United States v. Salinas, 373 F.3d 161, 167 (1st Cir. 2004) ("When materiality is a critical component of the statutory definition, it makes perfect sense to consider the crime as continuing into the district in which the effects of the false statement are felt."); United States v. Ringer, 300 F.3d 788, 792 (7th Cir. 2002) (finding venue in the district where the investigation was "reasonably likely to be affected by [the defendant's] statements"); but see United States v. Smith, 641 F.3d 1200, 1208 (10th Cir. 2011) (finding venue, where false statement was not recorded, only in the jurisdiction where the false statement was made). We therefore conclude that venue for Count Six was proper in the Southern District of New York.  

This result is fully consistent with our holdings in Candella and Ramirez. It is undisputed that Vaughn "ma[de]" the false statements at issue during the IRS deposition in Nashville—but "it does not follow that the crime then terminated, and that what transpired in Manhattan was irrelevant for venue purposes." Candella, 487 F.2d at 1228. In Ramirez, the offense began in New Jersey, where the fraudulent paperwork was filed, and ended in the Southern District of New York, the jurisdiction to which New Jersey officials forwarded the paperwork. Ramirez, 420 F.3d at 137-38. Similarly, the instant offense case began in Tennessee, where Vaughn made the false statements to IRS officials, but continued into the Southern District of New York, where his deposition transcript was reviewed and discussed by IRS officials in connection with the ongoing E&Y audit. The fact that Vaughn's statements "'continued to be false and continued to be in the jurisdiction of the United States when they finally reached Manhattan,'" Ramirez, 420 F.3d at 143 (quoting Candella, 487 F.2d at 1228)), confirms our view that venue was proper in the Southern District of New York. 

On occasion, we have supplemented our venue inquiry with a "substantial contacts" test that "takes into account a number of factors—the site of the defendant's acts, the elements and nature of the crime, the locus of the effect of the criminal conduct, and the suitability of each district for accurate factfinding." United States v. Reed, 773 F.2d 477, 481 (2d Cir. 1985). Since Reed, we have alternately applied and ignored the substantial contacts test. Compare United States v. Royer, 549 F.3d 886, 893 (2d Cir. 2008) (citing Reed with approval); United States v. Saavedra, 223 F.3d 85, 92-93 (2d Cir. 2000) (same); with United States v. Tzolov, 642 F.3d 314, 321 (2d Cir. 2011) ("Though Reed refers to a 'substantial contacts rule' for determining venue . . . it is clear that the [court] regarded the locale of the defendant's acts as a sufficient basis for establishing venue." (alteration in original) (other internal quotation marks omitted)). 

We have previously held, and we now clarify, that use of the substantial contacts test may be appropriate where, as here, the defendant "argue[s] that his prosecution in the [contested district] . . . [will] result[ ] in a hardship to him, prejudice[ ] him, or undermine[ ] the fairness of his trial." United States v. Magassouba, 619 F.3d 202, 205 n.2 (2d Cir. 2010). We think the District Court in this case proceeded with the required care by considering the factors enumerated in Reed and Saavedra before concluding that "the substantial contacts analysis weighs in favor of venue in this district." Vaughn does not appear to challenge the substance of that determination on appeal.