Tuesday, January 29, 2013

Article on Importance of Jury Instructions in White Collar, including Tax, Crime Cases (1/29/13)

I write today to direct readers to a recent very good article by Susan E. Brune and Laurie Edelstein titled Jury Instructions: Key Topics in Federal White Collar Cases, 36 Champion 26 (2012), here.  The authors' web site is here and their bios are here (Brune) and here (Edelstein).

The introduction:  "The right jury charge can make the difference between conviction and acquittal. "  The article then explores some contexts in which instructions can be particularly helpful in white collar crime cases.  As most readers will know (and as I remind my Tax Fraud class), tax crimes are a subject of white collar crimes, hence it is not surprising that the authors deal with instructions in tax crimes cases.

The six areas discussed are (1) Reasonable Doubt, (2) Willful Blindness, (3) Venue, (4) Securities Fraud, (5) Tax Evasion: Economic Substance, and (6) Antitrust.  I will focus on the comments on (1) Reasonable Doubt, (2) Willful Blindness and (3) Tax Evasion: Economic Substance.

Reasonable Doubt

The authors clearly summarize the courts' continuing inability to formulate instructions to explain reasonable doubt to a jury in a way that we can have confidence that the jurors understand the concept.  None of the various circuit courts' formulations is perfect, but the suggest that (footnotes omitted):
Defense counsel might consider proposing the Federal Judicial Center's (FJC) pattern instruction on reasonable doubt, which Justice Ginsburg highlighted in Victor. This instruction does away with the "hesitate to act" analogy and instead focuses on whether the government has met its burden of proof: "Proof beyond a reasonable doubt is proof that leaves you firmly convinced of the defendant's guilt." The "firmly convinced" standard, which certain circuits have approved, more accurately reflects the state of certainty required to find a defendant guilty.  
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Because the Supreme Court's decision in Victor effectively held that problematic words or definitions in a reasonable doubt charge can be neutralized by words or phrases that preclude the jury from requiring more than a reasonable doubt to acquit, it is unlikely that a reasonable doubt charge will provide grounds for reversal of a guilty verdict on appeal. Advocating for a charge that focuses on the government's burden and instructs the jury that it cannot convict unless it is firmly convinced of the defendant's guilt thus can be critical. It may help secure an acquittal in the first instance.
Willful Blindness

The authors offer a good succinct discussion of the courts' continuing problems with the willful blindness concept.  I have offered several less succinct discussions on that concept, here.  The concept goes by several names -- such as willful blindness, willful ignorance, conscious avoidance, etc.  I usually use conscious avoidance, but I will use the authors' preferred word -- willful blindness -- in this blog.

As I summarized the concept to my class last night, I think many courts do not crisply state the willful blindness concept.  It can mean either of the following:
a.  A jury may -- but is not required to -- infer from finding conduct that indicates willful blindness that the defendant really had the required degree of knowledge or willfulness required by the statute; or
b. A jury must infer that conduct that the defendant had the degree of knowledge or willfulness required by the statute.
The first formulation is consistent with a statute that requires knowledge or willfulness.  It still requires a jury finding of knowledge or willfulness, just using all the facts -- including willful blindness -- to make inferences of the required knowledge or willfulness.

The authors note, however, that, if the court uses willful blindness in the second meaning, then it has expanded the conduct statutorily required beyond knowledge or willfulness to include something other than knowledge or willfulness without any indication that Congress intended that expansion.  In other words, the courts have judicially created what is, in essence, a common law crime.  Constitutionally, that is suspect.  Readers will recall that, in a prior blog, we discussed the recent Second Circuit opinion in United States v. Coplan, et al., ___ F.3d ___, 2012 U.S. App. LEXIS 24613 (2d Cir. 11/29/12), here, where the Court questioned the expansion of the defraud conspiracy beyond the defraud element in the statute.  See Coplan #1 - Panel Questions Validity of Klein Conspiracy (12/1/12), here.  That same genre of expansion is at play in the second application of the willful blindness concept.

The authors succinctly replay Justice Kennedy's dissenting view of the propriety of this second meaning of willful blindness (only one footnote included).

Justice Anthony Kennedy's dissent strongly criticized the majority's reasoning and its suggestion that willful blindness can appropriately satisfy the mental state requirement in "all federal criminal cases involving knowledge." As Judge Kennedy pointed out, the Supreme Court had "never before held that willful blindness can substitute for a statutory requirement of knowledge." fn29 And he questioned the majority's "mistaken step" of sanctioning the substitution of one distinct mental state for another. 
    fn29  * * * Global-Tech was not the first time that Justice Kennedy has spoken on this issue. Then-Judge Kennedy wrote a forceful dissent in United States v. Jewell, the case in which the Ninth Circuit adopted the willful blindness doctrine. There, Judge Kennedy clearly explained the dangers of applying willful blindness in the criminal context: "the English authorities seem to consider wilful blindness a state of mind distinct from, but equally culpable as, 'actual' knowledge. When a statute specifically requires knowledge as an element of a crime, however, the substitution of some other state of mind cannot be justified even if the court deems that both are equally blameworthy." United States v. Jewell, 532 F.2d 697, 706 (9th Cir. 1976) (Kennedy, J., dissenting).
The majority's opinion in Global-Tech also overstates the federal judiciary's embrace of the willful blindness doctrine. Although the courts of appeals have upheld willful blindness instructions, many have also held that the instruction should rarely be given. These courts recognize that by allowing a jury to convict without finding that the defendant had actual knowledge of illegal conduct, the willful blindness doctrine endangers the fundamental principle that criminal mens rea is necessary for conviction. Justice Kennedy's dissents in Global-Tech and Jewell, discussed in note 29, along with appellate decisions that are critical of the doctrine, support an objection to a willful blindness instruction, particularly when knowledge is a statutory element of the relevant offense.  
Tax prosecutions provide a particularly compelling opportunity for challenging the instruction. Under Cheek v. United States, the government must prove beyond a reasonable doubt that a defendant committed a "voluntary, intentional violation of a known legal duty." A willful blindness instruction is inconsistent with the requirement that the government prove that a defendant had actual knowledge that his conduct violated the tax laws. 
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The upside about Global-Tech is that it strengthened the test that juries should apply when such an instruction is given. Previously, courts instructed the jury that the knowledge element could be satisfied by proof that the defendant "deliberately closed his eyes to what would otherwise have been obvious to him," or if a defendant "deliberately and consciously avoided confirming [the] fact." But under Global-Tech, willful blindness can substitute for actual knowledge only if the defendant (1) "subjectively believe[s] that there is a high probability that a fact exists" and (2) "take[s] deliberate actions to avoid learning of that fact." 39 In other words, the government must show that the defendant took an affirmative step to avoid learning a fact that he believed had a high probability of existing.
Tax Evasion: The Economic Substance Doctrine

I have discussed in the earlier blogs concerns I have about submitting the economic substance concept to the jury.  (See here for all my blogs on economic substance.)  Basically I question whether the concept can be made meaningful to the jury and whether, at least in tax cases, it should be chucked so as not to obscure the jury's view of the real crime -- the big lie.  The authors of this article focus on other issues, including the codification of the economic substance doctrine and the difficulty of formulating a meaningful profit motive test for the jury to apply.

JAT Conclusion

I strongly recommend to the students that they read this article and keep it handy for review as the need arises.

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