Eleventh Circuit Affirms Tax Obstruction Conviction Over Objections to Evidence on Tax Court Proceeding (10/3/17)

In United States v. Wrubleski, 2017 U.S. App. LEXIS 17168 (11th Cir. 2017) (nonpublished), here, Wrubleski was convicted of one count of tax obstruction under § 7212(a), and four counts of false claism under 18 USC § 287. I focus on the tax obstruction count and Wrubelski's argument on appeal.  In this regard, I remind readers that the Supreme Court has accepted certiorari in a tax obstruction case.  See Supreme Court Grants Certiorari in Marinello Involving Whether § 7212(a)'s Omnibus Clause Requires Knowledge of Pending Investigation (Federal Tax Crimes Blog 6/27/17), here.  Wrubleski does not involve the issue in that Marinello.

Over the years, Wrubleski had done many acts that the Government argued met the elements of that tax obstruction crime.  Among the items the Government introduced was evidence of Wrubleski's handling of a Tax Court case.  As recounted by the Court of Appeals, here is how that evidence offer played out:

At trial, the government called Ken Hochman, an attorney at the IRS, as one of its witnesses. Hochman testified that he represented the IRS in United States Tax Court, including in a case filed by Wrubleski in 2004 in which Wrubleski challenged the validity of an IRS collection action. Outside the presence of the jury, the district court expressed concern about Hochman's testimony. The court said it was "concerned that [] the government is attempting to take a taxpayer's participation in [the IRS] review process . . . as activity that can be looked at for the basis of a criminal charge" because "the government thinks the taxpayer was so baseless" in bringing the Tax Court action. The government explained that although Wrubleski's litigation in Tax Court could not itself constitute the crime of interference with the administration of the Internal Revenue laws, Wrubleksi's previous experience in Tax Court showed his "overall willfulness" to commit other acts that constitute the crime. 

When the jury returned, the district court gave a curative instruction. The court said:
I want to be clear that the fact that [Wrubleski] went to tax court, and the fact that, for instance, the government may not be happy with how [he] acted in the tax court . . . that can't be the basis of a charge of corruptly trying to impede the proper administration of the Internal Revenue Service. 

If you tell somebody they can take an appeal [to the Tax Court] and they take an appeal and they lose the appeal, that's not the basis of the charge here. 

The court then explained that information about Wrubleski's Tax Court litigation was "relevant only to the question of whether the government can prove that Mr. Wrubleski acted willfully." Before resuming Hochman's testimony, the court reiterated: "I want to make sure that everybody understands that how Mr. Wrubleski conducted himself in the litigation, that cannot serve as the basis for the first charge, which is the charge of corruptly impeding the administration of justice." Despite the court's instruction, Wrubleski moved for a mistrial on the ground that his "use of judicial [*4]  process . . . has been portrayed as being something improperly done toward the IRS." The district court denied his motion.

The Court of Appeals handled Wrubleski's complaint on appeal as follows:

Wrubleski appears to argue that using a defendant's previous legal proceedings against the IRS to prove the offense of interfering with the administration of the Internal Revenue laws, 26 U.S.C. § 7212(a), is an improper "theory of culpability." He says the evidence of his Tax Court proceedings showed only that "[h]e took advantage of the legal avenues offered to him," and did not prove he was "corruptly trying to obstruct or impede the IRS." 

Even assuming it was error to admit the evidence of Wrubleski's litigation history—a question we need not decide—the admission of this evidence did not mandate a mistrial here because the court gave an adequate curative instruction. The district court agreed with Wrubleski that a person's litigation in Tax Court could not constitute a violation of § 7212(a). As we described above, this prompted the district court to give an extensive curative instruction. The court instructed the jury that any actions Wrubleski filed in Tax Court "can't be the basis of a charge of corruptly trying to impede the proper administration of the Internal Revenue Service. . . . [H]ow Mr. Wrubleski conducted himself in the litigation, that cannot serve as the basis for the first charge, which is the charge of corruptly impeding the administration of justice." "When a curative instruction is given, this court reverses only if the evidence is so highly prejudicial as to be incurable by the trial court's admonition." United States v. Garcia, 405 F.3d 1260, 1272 (11th Cir. 2005) (per curiam) (quotation omitted). Here, the evidence that Wrubleski challenged his tax liability in Tax Court was not so prejudicial as to be beyond the cure offered by the district court's prompt and thorough instruction. Because the district court cured the error Wrubleski complains of, the court did not abuse its discretion in denying his motion for a mistrial. See Newsome, 475 F.3d at 1227.

I have written before on the breadth of the Government's claims as to what constitutes obstruction for tax crimes, including tax obstruction in 7212(a) and the defraud / Klein conspiracy in 18 USC 371.  See John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough, 9 Hous. Bus. & Tax. L.J. 255 (2009), here; and in a companion online appendix,  9 Hous. Bus. & Tax L.J. A-1 (2009), here.

The issue presented in Wrubleski, of course, is whether a defendant with a pattern of obstruction gets a pass with respect to his handling of a Tax Court case -- or presumably any other court case.  That is, how he brought and pursued the case could be a continuation of the overall pattern and thus part of the conduct within the scope of the crime.  Usually, as here, the are enough facts left in the pattern independent of the court proceeding that the conduct in the court proceeding is surplusage.  In a case like that, it would probably be the better part of wisdom on the prosecution just to not offer the evidence and on the judge not to allow introduction.