Friday, November 7, 2014

Weil and Reliance on Counsel / Good Faith Defense (11/7/14)

In my earlier blog, I noted:
3.  Since Weil did not testify, I wonder how exactly Weil's attorney got in the evidence that Weil had been advised by lawyers that the business was not illegal.  Note that Weil's attorney made the argument to the jury, so presumably there was some factual predicate in the record.  This is a variation of the good faith defense -- which is really not a defense but an attack on whether the Government has proved the level of mes rea required for the crime.  In most Title 26 tax crimes, that level of mens rea is willfulness -- voluntary, intentional violation of a known legal duty.  For the conspiracy charge, that level of mens rea is certainly required if the conspiracy charged is an offense conspiracy to commit a Title 26 tax crime requiring willfulness and, I would argue, something like that even with the defraud / Klein conspiracy.  I have discussed the of "good faith" and "reliance on professionals in my Federal Tax Crimes book.  The relevant excerpts from the book (as updated) are "good faith," here, and "reliance on professionals," here.
In the jury instructions, the Court advised the jury (boldface supplied by JAT):
It is further part of Mr. Weil's defense that this misconduct was in direct violation of UBS' policies and rules, including the U.S. Country Papers, and was done without Mr. Weil's knowledge or approval.  
This misconduct was not reported to Mr. Weil and was concealed by those who committed the misconduct. 
It is further a part of Mr. Weil's defense that Mr. Weil was also advised by lawyers for UBS that the existence of the U.S. cross-border business, including the non-W-9 business, was agreed to by the IRS and permitted by the QI Agreement and U.S. Tax Law. 
Lawyers and subordinates also advised Mr. Weil that the U.S. cross-border business, including the non-W-9 business, was operated in a way that was compliant with the QI Agreement and U.S. Tax Law. 
Now, evidence that the defendant in good faith followed the advice of counsel would be inconsistent with the element of willfulness. 
Willfulness has not been proved if the defendant, before acting, made a full and complete good faith report of all material facts to an attorney he considered competent, received the attorney's advice as to the specific course of conduct that was followed and reasonably relied upon that advice in good faith.
Although, it is clear from reading the context that the Court was simply stating Weil's reliance on professional defense argument, I think the bold faced items could be misconstrued as the Court stating the truth of the matters in those sentences.  Read those sentences on their own, and the conclusion is inevitable.  Of course, context matters, but who knows how a jury might have perceived these statements.

Moreover, focus on the requirements in the last paragraph of the defense that the defendant have made made full disclosure and reasonably relied on the advise.  I ask again how the evidence established those elements of the defense if the defendant did not testify.  I do understand that there may have been documents indicating that lawyers were involved and may have even rendered some opinions that some conduct -- not really specified -- was legal.  But that would not seem to fit the requirements for the defense.

In any event, and finally on this subject, from the reports I have read, the jury may have failed to convict because the Government's case was deficient to pin willfulness or knowing conduct of conspiracy on Weil, wholly independently of his good faith.  That is a fine line, I know, but perhaps that is what happened.


  1. It is certainly possible to assert the defense of reliance on the advice of counsel without the defendant taking the stand; "a criminal defendant is entitled to have instructions presented relating to any theory of defense for which there is any foundation in the evidence, no matter how weak or incredible, that evidence may be." United States v. Durham, 825 F.2d 716, 718-19 (2d Cir. 1987). The foundation could be laid by the lawyer's testimony; by the introduction of the lawyer's written advice to the defendant; by a memo or email saying that "this has been reviewed by the legal department"; or in other ways.

  2. I agree that it is not impossible to establish the defense without the defendant testifying. The types of testimony and possible documents you mention might do it. But, that "evidence" would have to show that the real facts were known to the lawyer and the lawyer gave reasonable advice on the real facts of legality. But, even then, there would have to be evidence that the defendant relied upon the advice. Perhaps that could be a reasonable inference that a jury could draw from proof of the real facts being given to the lawyer and reasonable advice on real facts, but even that is dicey.

    Jack Townsend

  3. I have had this fight with prosecutors in cases, with varying results. My position is that any evidence of advice of counsel is sufficient to get the instruction before the jury, because the defendant doesn't have to prove all the elements of the defense, but rather only needs to raise a reasonable doubt. To be sure, some judges will insist on more of an evidentiary foundation before even charging on the defense, but I think that confuses an affirmative defense with a mere denial of mens rea.


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