The Willful Blindness Concept -- What Does It Do? (1/23/17)

Willfulness is a statutory element of most Title 26 tax crimes.  E.g., § 7201 (tax evasion), here.  Willfulness is the "voluntary, intentional violation of a known legal duty." Cheek v. United States, 498 U.S. 192, 201 (1991).  Willfulness has been described as "specific intent to violate a known legal duty."  Safeco Ins. Company of America v. Burr, 551 U.S. 47, 58 n. 9 (2007) (citing Cheek).  For example, a typical jury instruction on the willfully element for tax evasion is (Seventh Circuit Pattern Jury Instructions, here, quoted in DOJ Tax CTM Government Proposed Jury Inst. No. 26.7201-18, here):

The term “willfully” means the voluntary and intentional violation of a known legal duty, in other words, acting with the specific intent to avoid paying a tax imposed by the income tax laws or to avoid assessment of a tax that it was the legal duty of the defendant to pay to the government, and that the defendant knew it was his/her legal duty to pay.

The question I address today is the role of the concept of willful blindness with respect to the willfulness element of tax crimes.  I have discussed this issue before and list at the bottom of this blog entry some of my more significant prior blog entries dealing with some aspect of this issue.  I want to address it again today because I continue to be concerned about the issue and would appreciate feedback from readers either by comment or by email (jack@tjtaxlaw.com).

First, readers should be aware that the willful blindness concept goes by several names -- willful ignorance, deliberate blindness, deliberate ignorance, conscious avoidance, etc.  I use the term willful blindness in the current blog.   (For more on the issue of the use of various terms and my decision to use willful blindness in this blog entry, see the note at the end of this blog entry.)  The key for present purposes to make sure that the use of the term willful blindness is not in any way conflated with the willfulness element of the tax crime.

In Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011), here, a civil patent case, the Supreme Court found support for applying a similar concept in the civil patent infringement area.  In dicta, the Court said (footnotes omitted):

The doctrine of willful blindness is well established in criminal law. Many criminal statutes require proof that a defendant acted knowingly or willfully, and courts applying the doctrine of willful blindness hold that defendants cannot escape the reach of these statutes  by deliberately shielding themselves from clear evidence of [*2069]  critical facts that are strongly suggested by the circumstances. The traditional rationale for this doctrine is that defendants who behave in this manner are just as culpable as those who have actual knowledge. Edwards, The Criminal Degrees of Knowledge, 17 Mod. L. Rev. 294, 302 (1954) (hereinafter Edwards) (observing on the basis of English authorities that “up to the present day, no real doubt has been cast on the proposition that [willful blindness] is as culpable as actual knowledge”). It is also said that persons who know enough to blind themselves to direct proof of critical facts in effect have actual knowledge of those facts. See United States v. Jewell, 532 F.2d 697, 700 (CA9 1976) (en banc). 

This Court's opinion more than a century ago in Spurr v. United States,  174 U.S. 728, 19 S. Ct. 812, 43 L. Ed. 1150 (1899), while not using the term “willful blindness,” endorsed a similar concept. The case involved a criminal statute that prohibited a bank officer from “willfully” certifying a check drawn against insufficient funds. We said that a willful violation would occur “if the [bank] officer purposely keeps himself in ignorance of whether the drawer has money in the bank.” Id., at 735, 19 S. Ct. 812, 43 L. Ed. 1150. Following our decision in Spurr, several federal prosecutions in the first half of the 20th century invoked the doctrine of willful blindness. Later, a 1962 proposed draft of the Model Penal Code, which has since become official, attempted to incorporate the doctrine by defining “knowledge of the existence of a particular fact” to include a situation in which “a person is aware of a high probability of [the fact's] existence, unless he actually believes that it does not exist.” ALI, Model Penal Code § 2.02(7) (Proposed Official Draft 1962). Our Court has used the Code's definition as a guide in analyzing whether certain statutory presumptions of knowledge comported with due process. See Turner v. United States, 396 U.S. 398, 416-417, 90 S. Ct. 642, 24 L. Ed. 2d 610 (1970); Leary v. United States, 395 U.S. 6, 46-47, and n. 93, 89 S. Ct. 1532, 23 L. Ed. 2d 57 (1969). And every Court of Appeals--with the possible exception of the District of Columbia Circuit, see n. 9, infra--has fully embraced willful blindness, applying the doctrine to a wide range of criminal statutes.

The key fact in question for willfulness in tax crimes is the specific intent to violate a known legal duty. This breaks down into two key "facts" -- the defendant's knowledge of the law and the defendant's intent to violate the law that he knows. Cf. United States v. Stadtmauer, 629 F.3d 238 (3d Cir. 2010) (approving inference-type willful blindness instruction as to knowledge of the law but not encompassing specific intent to violate the law); and DJT CTM 8.08[4] Conscious Avoidance/Willful Blindness Instruction, here (citing Stadtmauer, "Care must be taken to ensure that the conscious avoidance instruction applies only to the element of "knowledge," and does not extend to the government's obligation to prove a "voluntary, intentional violation."). It gets a little dicey here, because the defendant's commission of the actus reus (for tax evasion, actually two actions -- the tax due and owing and the affirmative act of evasion) with knowledge of the law would permit the inference that he intended to violate the law that he knew about.  I am not sure that would be a compelled inference, because conceptually the defendant might know the law and may not intend via the actus reus (two for tax evasion) to violate the law.  Still, the leap from knowledge of the law to intent to violate the law would be a short one where the defendant committed the actus reus (two for tax evasion) with the knowledge of the law.  Setting  that I aside I want to address how willful blindness is used (the knowledge of the law component, as opposed to the specific intent component).

There might be two ways of using acts of willful blindness:

• First, actions indicating avoidance of knowledge of the law might, along with the other evidence, permit the jury to infer that the defendant had the required knowledge of the law.  In this sense, willful blindness is simply a form of circumstantial evidence as to the knowledge. 
• Second, those actions indicating avoidance of knowledge might, if proved beyond a reasonable doubt, be deemed to establish the statutory element of willfulness even if the jury cannot find beyond a reasonable doubt that the defendant had the required knowledge of the law.  In this sense, the finding as to actions of willful blindness become a substitute for a finding of the knowledge require by the statute.

To distinguish these two ways of using acts of willful blindness to establish knowledge, I will call them the permissive inference use and the compulsory finding use.

I think Global-Tech establishes the compulsory finding test for the civil patent purposes directly at issue in the case.  That is certainly how Justice Kennedy, in dissent, read it.  I am not sure that it necessarily does for criminal purposes which was not involved in the case.  So the real question is whether, whatever was actually held in Global-Tech, the compulsory finding use is required in criminal cases where knowledge of an element of the crime.

The CTM seems to adopt the permissive inference rather than the compulsory finding view of willful blindness (8.08[4] Conscious Avoidance/Willful Blindness Instruction here), here (bold face supplied by JAT):

Most courts have ruled that if there is evidence that the defendant deliberately avoided acquiring knowledge of a fact or the law, the jury may infer that the defendant actually knew of the fact or the law and was merely trying to avoid giving the appearance (and incurring the consequences) of knowledge.

Note "may infer" rather than must infer or find the knowledge element.  Then, the CTM comes somewhere in between:

Even if the defendant successfully avoided actual knowledge of the fact, “[t]he required knowledge is established if the accused is aware of a high probability of the existence of the fact in question unless he actually believes it does not exist.” United States v. Fingado, 934 F.2d 1163, 1166 (10th Cir. 1991). 

This is kind of odd.  Think of it in burden of proof terms.  The Government's burden is to establish the elements of the crime beyond a reasonable doubt.  Does this mean that the Government's burden for the back-door willful blindness route requires proof beyond a reasonable doubt (i) as to the high probability mentioned, plus (ii) that defendant did not actually believe the fact (the law in question)?  It certainly reads like the second part is not compelled by the jury's finding on the first part and the jury must bring all the circumstantial evidence to bear to make the required inference on the second part.  Meaning, in the final analysis, I think, that willful blindness does not, of itself, even if proved beyond a reasonable doubt compel a jury finding of knowledge of the law.

After cautioning prosecutors about requesting the willful blindness instruction sparingly (a sentiment echoed by the courts), the CTM says:

Furthermore, in a tax case, the language of any conscious avoidance instruction must not conflict with the government’s obligation to prove the voluntary, intentional violation of a known legal duty. See Section 8.08. Care must be taken to ensure that the conscious avoidance instruction applies only to the element of "knowledge," and does not extend to the government's obligation to prove a "voluntary, intentional violation." See United States v. Stadtmauer, 620 F.3d 238, 258-259 (3d Cir. 2010) ("The Court's instructions made clear that willful blindness applied only to the element of knowledge"). When a deliberate ignorance or conscious avoidance instruction is given, the jury should also be given a separate Good Faith instruction, which expressly directs the jury not to convict for negligence or mistake.

Finally, I thought it might be helpful to offer some representative sample proposed or pattern jury instruction crafted after Global-Tech for use in criminal cases.

From the DOJ CTM, here.  Note that this jury instruction goes to the issue of "knowledge" in the sense of knowledge of falsehood.  I am not sure that is any different conceptually than knowledge of the law.

GOVERNMENT PROPOSED JURY INST. NO. 26.7201-19
Knowledge of Falsehood
(Deliberate Ignorance)
The government may prove that Defendant __________ acted “knowingly” by proving, beyond a reasonable doubt, that this defendant deliberately closed [his] [her] eyes to what would otherwise have been obvious to [him] [her]. No one can avoid responsibility for a crime by deliberately ignoring what is obvious. In order to infer knowledge, you must find that two things have been established:
First, that the defendant was aware of a high probability of [the fact in question].
Second, that the defendant consciously and deliberately took actions to avoid learning about the existence of that fact.
It is entirely up to you as to whether you find any deliberate ignorance or deliberate closing of the eyes and any inferences to be drawn from any such evidence.
You may not conclude that the defendant had knowledge, however, from proof of a mistake, negligence, or carelessness. You may not conclude that defendant had knowledge if the defendant did not actually believe in the existence of that fact. There must be an awareness of a high probability of the existence of the fact and a deliberate effort to remain ignorant of the fact.

The sense of this proposed instruction is that willful blindness only permits the inference but does not compel the conclusion of the required knowledge.  (See the bold face words.)  And, shouldn't the defense responding to this type of request also insist that the jury be instructed that the Government prove beyond a reasonable doubt that the defendant did not actually believe that the law permitted the action?  I think that such an additional instruction might well make the basic concept meaningless to a jury who really tries to understand, from the words of the instructions as clarified, what the concept of willful blindness really is.

Now for various pattern or model jury instructions from the various U.S. Courts of Appeals, see the following Marquette Law Library Research Guide titled Jury Instructions Research Guide: United States Courts of Appeals, here.  I quote some of them below

From the First Circuit, here (these are the Maine District Court's revisions to the First Circuit Pattern Instructions updated on 9/20/16):

2.16 “Willful Blindness” As a Way of Satisfying “Knowingly”
[Updated: 7/17/15] 

In deciding whether [defendant] acted knowingly, you may infer that [defendant] had knowledge of a fact if you find that [he/she] deliberately closed [his/her] eyes to a fact that otherwise would have been obvious to [him/her]. In order to infer knowledge, you must find that two things have been established.  

First, that [defendant] was aware of a high probbility of [the fact in question]. 

Second, that [defendant] consciously and deliberately avoided learning of that fact. That is to say, [defendant] willfully made [himself/herself] blind to that fact.  

It is entirely up to you to determine whether [he/she] deliberately closed [his/her] eyes to the fact and, if so, what inference, if any, should be drawn. However, it is important to bear in mind that mere negligence, recklessness or mistake in failing to learn the fact is not sufficient. There must be a deliberate effort to remain ignorant of the fact.

The sense of this proposed instruction is that willful blindness only permits the inference but does not compel the conclusion of the required knowledge.  (See the bold face words.)

Third Circuit, here.

Cites approvingly this instruction regarding falsity of the return (falsity being a fact not indistinguishable for present purposes from knowledge of the law) from United States v. Stadtmauer, 629 F.3d 238 (3d Cir. 2010):

The element of knowledge on the part of the defendant may be satisfied by inferences drawn from proof that the defendant closed his eyes to what  would otherwise have been obvious to the defendant. A finding beyond a reasonable doubt of a conscious purpose by the defendant to avoid knowledge that the tax returns at issue were false or fraudulent as to a material matter would permit an inference that he had such knowledge. 

Stated another way, the defendant’s knowledge of a fact or circumstance may be inferred from his willful blindness to the existence of that fact and circumstance.
No one can avoid responsibility for a crime by deliberately ignoring what is obvious. Thus, you may find that the defendant knew that the tax returns at  issue were false or fraudulent as to a material fact based on evidence that you find exists that proves beyond a reasonable doubt that the defendant was aware of a high probability that the tax returns at issue were false or fraudulent as to a material matter; and two, that defendant consciously and deliberately tried to avoid learning about this fact or circumstance. 

Fifth Circuit, here:

1.37A
DELIBERATE IGNORANCE 

You may find that a defendant had knowledge of a fact if you find that the defendant deliberately closed his eyes to what would otherwise have been obvious to him. While knowledge on the part of the defendant cannot be established merely by demonstrating that the defendant was negligent, careless, or foolish, knowledge can be inferred if the defendant deliberately blinded himself to the existence of a fact.

Seventh Circuit, here:

4.06 “KNOWINGLY” - DEFINITION
When the word “knowingly” [the phrase “the defendant knew”] is used in these instructions, it means that the defendant realized what he was doing and was aware of the nature of his conduct, and did not act through ignorance, mistake or accident. 

[Knowledge may be proved by the defendant's conduct, and by all the facts and circumstances surrounding the case.] 

[You may infer knowledge from a combination of suspicion and indifference to the truth. If you find that a person had a strong suspicion that things were not what they seemed or that someone had withheld some important facts, yet shut his eyes for fear of what he would learn, you may conclude that he acted knowingly, as I have used that word. {You may not conclude that the defendant had knowledge if he was merely negligent in not discovering the truth.}]

CONCLUSION

My sense is that it may not yet be conclusively settled as to whether the willful blindness test allows only a permissive inference or requires a compulsory finding.  However, it does seem to me (for much the same reason Justice Kennedy voiced in dissent in Global-Tech) that the compulsory finding view is inconsistent with the statutory test and thus cannot substitute for knowledge required by the statute.  And, the language of the pattern jury instructions seem to support that interpretation.


Note on Terminology for the Willful Blindness Concept:  The willful blindness concept goes under various terms, such as deliberate ignorance or blindness, conscious avoidance, etc.  When I first started writing on the concept, I used the term conscious avoidance recommended in the DOJ CTM.  The current CTM says (8.08[4] Conscious Avoidance/Willful Blindness Instruction, at fn. 9):  "To minimize the potential for confusion with the meaning of “willfulness” as it relates to the defendant’s intent, the Tax Division recommends using the term “conscious avoidance” or “deliberate ignorance” and avoiding the phrase “willful blindness.”  Since my original adoption of the conscious avoidance terminology, the Supreme Court has used the term willful blindness and many courts seem to be gravitating to that term.  Nevertheless, although I use the term here willful blindness and have often use that term, for purposes of the link for identifying all blogs, I continue to use the term conscious avoidance.

Prior Blogs Thrashing Around on this Issue (I will try to list these roughly in order of their importance to the issue addressed in this blog):

• Supreme Court Speaks on Willful Blindness (Federal Tax Crimes Blog 6/2/11), here.
• Third Circuit Decision in Stadtmauer - Willful Blindness (Conscious Avoidance) (Federal Tax Crimes Blog 9/10/10), here.
• Willful Blindness / Conscious Avoidance Again (Federal Tax Crimes Blog 5/23/14), here.
• Conscious Avoidance All Over Again (Federal Tax Crimes Blog 1/23/13), here.
• Coplan #5 - Conscious Avoidance / Willful Blindness - Affirmed as to 1; Sidestepped as to 2 (Federal Tax Crimes Blog 12/4/12), here.
• Further on Conscious Avoidance as a Substitute for -- or Indistinguishable From -- Willfulness (Federal Tax Crimes Blog 1/12/12), here.
• Third Circuit Court of Appeals Affirms Conviction Holding that the “Willful Blindness” Instruction was Proper (Federal Tax Crimes Blog 5/5/14), here (a guest blog by Joe DiRuzzo), here.
• More on Recklessness as Cheek Willfulness (Including for FBAR Civil Penalty) or Willful Blindness (Federal Tax Crimes Blog 7/22/14), here.
• On Ignorance - Deliberate or Otherwise (Federal Tax Crimes Blog 6/17/15), here.
• Defense Counsel Lesson: Always Object to a Willful Blindness Instruction Before Moving to Damage Control (Federal Tax Crimes Blog 12/24/16), here.