Saturday, April 30, 2016

FRE 404( b) Order on Motion in Limine for Charges under § 7214(a)(5) & (7) (4/30/16)

This posting will be for students and new practitioners.  Most experienced practitioners will have encountered the key FRE 404(b), here, issue before.

In United States v. English, 2016 U.S. Dist. LEXIS 54352 (ED 2016), the Court ruled on the Government's Motion in :imine involving, in part, FRE 404(b).  A motion in limine is a pre-trial motion filed to address some matter, usually evidentiary, that is expected to arise during the trial and that may efficiently be handled prior to trial.  I have stated the case name as United States v. English, which is the style of the key Order on Motion in Limine that I discuss here.  The indictment, however, stated her name as Kimberly Brown-English.  I don't know why the subsequent Order uses only English, but for convenience I refer to her as English here as did the Order rather than Brown-English.

First I will offer some background.

The relevant documents are:
  1. Docket Entries through 4/29/16, here.
  2. Indictment filed 10/9/14, here.
  3. Government's Motion in Limine, here.
  4. Defendant's Opposition to Government's Motion in Limine, here.
  5. Government's Reply to Defendant's Opposition to Government's Motion in Limine, here.
  6. Order on Government's Motion in Limine, here.
The defendant, Kimberly English (English), was charged with six counts of violating § 7214(a)(5) & (7), here, which provides in relevant part:
26 U.S. Code § 7214 - Offenses by officers and employees of the United States
(a) Unlawful acts of revenue officers or agents. Any officer or employee of the United States acting in connection with any revenue law of the United States—
* * * *
(5) who knowingly makes opportunity for any person to defraud the United States, or
* * * *
(7) who makes or signs any fraudulent entry in any book, or makes or signs any fraudulent certificate, return, or statement, * * * *
shall be dismissed from office or discharged from employment and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both. The court may in its discretion award out of the fine so imposed an amount, not in excess of one-half thereof, for the use of the informer, if any, who shall be ascertained by the judgment of the court. The court also shall render judgment against the said officer or employee for the amount of damages sustained in favor of the party injured, to be collected by execution.
According to the indictment, English was an employee of the IRS.  During the relevant period,
her primary duty was to provide assistance to taxpayers throughout the United States that were under IRS examination by educating taxpayers on tax laws and helping them resolve IRS examination issues. To hold the position, defendant KIMBERLY BROWN-ENGLISH was required to complete training courses that included, among other topics, the Earned Income Credit, Child Tax Credits, claimed dependents, and filing status (e.g., status as Head of Household).
The indictment charges that she filed her 2011 and 2012 income tax returns claiming as dependents persons who were not dependents, thereby obtaining undue refunds.  This is the basis for two counts under § 7214(a)(7) -- one for each year.

In addition, the indictment charges that English filed false returns for others in which she falsely claimed as dependents persons who were not dependents of the taxpayers.  This is the basis for four counts under 7214(a)(5).

The first thing to note about the charges is that, as is usually the case, the Government could have charged the defendant under a number of other provisions -- such as
  • as to all counts, tax evasion, 7201, here.
  • as to the first two counts, tax perjury, 7206(1), here.
  • as to the latter four counts, aiding and assisting, 7206(2), here.

And there could be more.  Section 7214(a) is a five year felony offense, as is tax evasion, but taxpayer perjury and aiding and assisting are three year felony counts.  Judging by the prescribed period of incarceration, only tax evasion is as offensive, so to speak, as the § 7214(a) offense.  And, given that English was an IRS employee at the time, § 7214(a) is the more targeted offense to charge.  (I suppose that she could have been charged under the other provisions in addition to § 7214(a) since the elements of those offenses are not the same as § 7214(a), but that is another story involving piling on of charges without any effect upon sentencing that I will not address here.)

In the Motion in Limine, the Government made the following motions that the Court resolved:
A. Motion in Limine #1: The Defendant Should Be Precluded From Introducing Her Own Self-Serving Statements Unless She Testifies Subject to Cross-Examination. 
B. Motion in Limine #2: The Defendant Should Be Prohibited From Eliciting Testimony From Lay Witnesses on Their Opinion of the Defendant’s State of Mind. 
C. Motion in Limine #3: The Government Should Be Permitted to Introduce the Following Nine Tax Returns In Its Case-In-Chief, As They Are Inextricably Intertwined With The Charged Conduct Or, Alternatively, Pursuant To Federal Rules of Evidence 402, 403, and 404(b).
A Fourth Motion in Limine was subsequently withdrawn, so I do not offer it here.

In the order, the Court addresses the admission of certain tax returns prepared by English.  The controversy arises under FRE 404(b) which provides:
(b) Crimes, Wrongs, or Other Acts.
   (1) Prohibited Uses. Evidence of a crime, wrong, or other act is not admissible to prove a person’s character in order to show that on a particular occasion the person acted in accordance with the character.
   (2) Permitted Uses; Notice in a Criminal Case. This evidence may be admissible for another purpose, such as proving motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident. On request by a defendant in a criminal case, the prosecutor must:
      (A) provide reasonable notice of the general nature of any such evidence that the prosecutor intends to offer at trial; and
      (B) do so before trial — or during trial if the court, for good cause, excuses lack of pretrial notice.
The danger to which the Rule is addressed is that proof of character or, as some say, propensity is not proof that the defendant committed the crime charged.

The Court's opinion is fairly short, so, although it is linked above, I just quote it here in full (with just a brief omission at the beginning):
Those motions came on for hearing before the court on April 12, 2016. Assistant U.S. Attorneys Patrick R. Delahunty and Angela L. Scott appeared for the government and attorney Marc Days appeared for the defendant. The court ruled from the bench, granting the government's * * * contested motions in limine #1, #2 and #3 to the extent the latter pertained to three tax returns filed by defendant on her own behalf. (See Doc. No. 39.) n1 The court took government motion in limine #3 under submission to the extent it sought leave to introduce in its case in chief, seven 2011-12 tax returns allegedly prepared by defendant on behalf of others, which conduct is not charged in the pending indictment. (Id.) 
This final aspect of the government's motions in limine will be denied. The government first argues that the seven other tax returns prepared by defendant should be admitted in its case in chief because they are inextricably intertwined with the criminal conduct charged in the indictment. The court is not persuaded. The Ninth Circuit has stated: 
We have recognized two categories of evidence that may be considered "inextricably intertwined" with a charged offense and therefore admitted without regard to Rule 404(b). See United States v. Vizcarra—Martinez, 66 F.3d 1006, 1012 (9th Cir.1995). First, evidence of prior acts may be admitted if the evidence "constitutes a part of the transaction that serves as the basis for the criminal charge." Id. Second, prior act evidence may be admitted "when it was necessary to do so in order to permit the prosecutor to offer a coherent and comprehensible story regarding the commission of the crime." Id. at 1012-13. 
United States v. DeGeorge, 380 F.3d 1203, 1220 (9th Cir. 2004). 
Here, defendant's preparation of the seven other, uncharged, tax returns does not fit into the first category described by the court in DeGeorge. The government made clear at the hearing that it is not prepared to prove that those seven returns were false or fraudulent. Thus they certainly cannot be said to be part of a "single criminal episode." United States v. Lilliard, 354 F.3d 850, 854 (9th Cir. 2003). Nor does the government need the introduction of these seven returns which defendant allegedly prepared for others to offer a "coherent and comprehensive story" of defendant's commission of the charged offenses. DeGeorge, 380 F.3d at 1220. The government presumably intends to present evidence at trial that defendant willfully filed false returns for the 2011 and 2012 tax years on her own behalf and willfully prepared four returns for others in those same years knowing them to contain false information as well. The fact that defendant also prepared seven other returns, which the government is not prepared to prove contained false information, is clearly not necessary for the jury to understand the government's theory as to the six counts charged. Therefore, those seven returns are not admissible as inextricably intertwined with the charged criminal conduct. See United States v. Anderson, 741 F.3d 938, 949 (9th Cir. 2013) ("Where the evidence . . . is not part of the charged transaction and the prosecution would encounter little difficulty in presenting the evidence relevant to its case against the defendant without it, the evidence is not admissible as being intrinsic to the charged offense.") (citing United States v. King, 200 F.3d 1207, 1215 (9th Cir. 1999). 
  Alternatively, the government argues that the seven returns prepared on behalf of others by defendant are admissible under Federal Rule of Evidence 404(b). Once again, at the hearing the government made clear that they do not intend to prove that these returns contained false information. n2 While evidence may not necessarily have to be of "bad acts" per se to be admissible under 404(b), it still must be probative as to an issue in the case other than propensity or character. Here, the government's general claim that admission of these seven returns is probative of defendant's willfulness in preparing and filing the six false or fraudulent tax returns charged in the indictment is simply not compelling.
   n2 Though the government does take the position that the seven returns in question contain claims of exemptions and deductions similar to the ones that government has alleged are false in the charged counts. In the court's view, this raises a heightened concern regarding the potential for unfair prejudice were the uncharged returns to be admitted in the government's case in chief.
Finally, the government indicates that it is seeking to introduce the seven uncharged returns in its case in chief in order to counter an anticipated defense based upon a claim of mere mistake or accident and to establish that defendant was familiar with tax laws in general and held herself out to be a tax preparer. Of course, if defendant elects to testify on her own behalf at trial and were to do so in the manner anticipated by the government, her preparation and filing of these seven returns will likely be the appropriate subject of cross-examination. Likewise, if a defense (with or without the defendant's own testimony) is presented based upon mistake, accident or lack of knowledge regarding the tax laws, the seven returns would no doubt be offered in the government's rebuttal case. However, the court is not persuaded that the evidence is admissible for any proper purpose in the government's case in chief. 
For the reasons set forth above, the government's contested motion in limine #3 (Doc. No. 33) with respect only to the seven tax returns prepared for others which were not charged in the indictment is denied.
I think the Court made a good decision here.  Most of these types of decisions represent judgment calls which the trial judge makes in the overall context of the case.  Often they can go either way, and there is no way to "split the difference."  The most that can be hoped for is that the judge is fair.  And, I suspect that, if the Government has a case on the merits of the charges it made in the indictment (well, the grand jury made in the indictment), it can make it without this evidence.

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