Tuesday, August 9, 2016

Priest Pleads Guilty to Tax Evasion After Losing on Suppression Motion re Miranda (8/9/16)

DOJ Tax has this press release, here, on a Catholic Priest who has pled to tax evasion on income he stole from parishoners.  The indictment is here.  This is cut and paste from the press release:
Father Hien Minh Nguyen, 56, admitted that over a period of four years, he stole money his parishioners donated to the Diocese and willfully evaded paying income taxes on the money he misappropriated each year from 2008 through 2011.  He admitted that he deposited this money into his personal bank account, did not disclose this income to his return preparer, did not keep records of the donations he stole, and filed false income tax returns which did not report this money.  
Father Nguyen also pleaded not guilty to bank fraud charges.  Those charges are still pending.  
“Father Nguyen stole money from his parishioners and filed false returns with the IRS to evade his income tax obligations,” said Principal Deputy Assistant Attorney General Ciraolo.  “The department remains committed to holding all criminal tax offenders accountable for their illegal conduct, regardless of their profession.  No one is above the law.” 
Sentencing on the tax evasion convictions has not been scheduled.  Father Nguyen faces a statutory maximum sentence of five years in prison and monetary penalties for each tax evasion conviction. Father Nguyen’s next scheduled appearance is a status conference on the bank fraud charges currently scheduled for Aug. 23.  An indictment is merely an allegation and a defendant is presumed innocent until and unless proven guilty in court.  Father Nguyen pleaded guilty to the tax evasion charges.  He has not pleaded guilty to bank fraud charges and remains presumed innocent of those charges. 
This just seems a different iteration of garden variety fraud coupled with tax evasion.

In an earlier decision, the district court denied a motion to suppress statements he made to "IRS agents on the basis that they were: (1) involuntary; and (2) the product of an un-Mirandized custodial interrogation."  United States v. Nguyen, Case No. 15-cr-00203-BLF-1 (N.D. Cal. May 05, 2016), here.  Such claims by taxpayers who make admissions or false statements to IRS agents are often made and rarely successful.  Although the court ultimately rejected the claim, the pattern is unusual.  The agents surprised the taxpayer with a request to interview him which he allowed.  At the start, the IRS noncustodial Miranda warning was given.  The taxpayer then started giving inconsistent answers.  The agents called the inconsistencies to his attention.  He ask what was the worst that could happen to him.  They declined to answer the question.  He then asked for a break, and the agents left the room.  A short while later, he invited the agents back into the room.  The agents then read him the noncustodial Miranda warning.  The agents then continued the questioning and he continued to participate.  He lied in some of his answers.  Then he said he had stolen the money.  The district court held that he participated voluntarily in the noncustodial interview and had not been tricked, deceived or coerced.

In my experience, in cases where the agents suspect a possible crime within the scope of CI's investigative authority, they will always start with the noncustodial Miranda warning.  Indeed, IRM  (02-01-2005), Subject of Investigation, here, requires that, at the start of the initial interview, the agents first identify themselves as IRS CI agents whose job includes investigation of tax crimes.  In the next paragraph, with no specific time statement, the agents are required to give the noncustodial warnings.  As stated, there is no express temporal requirement, but the implication and, in my experience, the practice, has been to give the warning.  The Court addresses the taxpayer's argument on this as follows:
iv. The IRS Form 5661 Non-Custody Statement Of Rights 
Finally, Defendant makes much of the fact that Agents Saavedra and Gonzales did not administer the IRS Form 5661 Non-Custody Statement of Rights until one and a half to two hours into the interview with Defendant, apparently in contravention to IRS protocol. Defendant points out that the IRS manual instructs agents to read the Form 5661 statement "[a]t the outset of your first official meeting with the subject of the investigation . . . ." Exhibit 2 ("Exh. 2"); id. at 38:18-39:5. The manual also required agents to "identify yourself as a special agent of the IRS and produce authorized credentials." Exh. 2. During the hearing on this motion, counsel for Defendant engaged in lengthy exchanges with Agent Saavedra on cross-examination as to whether the agents followed IRS protocol in failing to give the Form 5661 statement at the outset of their meeting with Defendant. Hearing Transcript at 36:22-44:20. Agent Saavedra testified that IRS Form 5661 was context-specific, and applied only in administrative investigations of a subject, not in grand jury investigations. Id. at 40:14-44:20. Defendant then pressed Agent Saavedra on whether or not the IRS manual expressly distinguished between administrative and grand jury investigations with respect to the applicability of IRS protocol. Id. at 44:5-20. 
Defendant's focus on the proper administrative procedure accompanying the issuance of a Form 5661 warning misses the point. Although whether and at what point the IRS manual required Agents Saavedra and Gonzales to administer the Form 5661 Non-Custody Statement of Rights might bear on an administrative proceeding (for which the Court makes no determination), it has no bearing in this constitutional context. For Fifth Amendment purposes, the analysis is whether a person is "in custody," and "subjected to interrogation." Miranda, 384 U.S. at 467; see also United States v. Gutierrez-Salinas, No. 14-50556, 2016 WL 696499, at *3 (9th Cir. Feb. 22, 2016). For the reasons discussed above, the Court finds that Defendant was not in custody during the initial portion of the interview so as to require the administration of Miranda warnings. Defendant was properly provided his Miranda rights at the midpoint of the interrogation and thus, none of his later statements are contested on this point.
I wonder whether Court's analysis is correct.  If the only question is whether he is in custody -- almost invariably the case in IRS CI investigations -- then failure to give Miranda warning is not relevant.  However, there are some IRS investigations that could be deemed custody equivalent via deceit, trickery, coercion, etc., so that the smart move is for agents to give them at the beginning whether they, technically, need to or not.  Besides it is the fair thing to do.  This taxpayer may not have allowed the interview had he been read those rights at the start.  And, I am not sure that reading the rights midstream is a fair way to cure the problem.  By then the un-Mirandized client may be so deep that it is not fair that the statements either earlier or even later during an extended interview be used.

I would love to have readers' comments on their experiences and whether they are concerned as well.

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