Thursday, January 10, 2019

Tax Crimes History -- The Fail of Vice-President Spiro Agnew and the Role of Tax Crimes (1/10/18)

I listened to this podcast covering a moment history where the President and Vice-President were each under separate unrelated criminal investigations.  This focuses on the Vice-President.  Everybody knows about the outcome of the President -- resignation and pardon by his sucdessor, Gerald Ford (I do summarize the key background below).  For most of us, if we know VP Spiro Agnew at all, it is as a footnote and most of us (like one famous Supreme Court Justice at least claimed) don't read footnotes.  We ought to.  Sometimes.  Terry Gross and her guests lift this footnote and brings it to general public attention because it is relevant to today.  Bad Behavior By People In High Office': Rachel Maddow On The Lessons Of Spiro Agnew (NPR Fresh Air 1/9/19), here.

And, not only is it history, there is a federal tax crime involved which is the excuse for this posting.

The Fresh Air presentation is a good summary podcast (43 minutes) of a larges podcast series called Bagman, here, a Rachel Maddow presentation (without blatant political rhetoric).  Bagman is a 6 episode series.  I listen to the larger series next on my daily walks, but I can highly recommend the Fresh Air presentation because Terry Gross is a good guide to get to the essentials in a single podcast of 43 minutes.  Many of you may not want to go into the details after the Fresh Air presentation.

But, I will give my own shorter summary of this event and its historic setting - Watergate (Wikipedia here).

The Watergate break-in had occurred.  It looked like some hacks of no consequence breaking into the Democratic National Committee headquarters.  But, as the facts dribbled out, it turned out to be a political operation orchestrated from the White House.  The ripples from that were slow to start.  But built to a crescendo that eventually led to President Nixon's resignation.  But before getting there, there was a grand jury investigation.  Some persons (including the infamous John Dean) pled guilty.  The grand jury indicted former White House aides, including Presidential top level assistants Haldeman and Ehrlichman, and the Attorney General, John Mitchell.  Nixon appointed Elliot Richardson to replace Mitchell as Attorney General.  Richardson then named Archibald Cox as special counsel to investigate the Watergate scandal.

The Senate Watergate Committee then uncovered Nixon's taping of Oval Office conversations.  Cox, as special counsel, was keenly interested in the tapes and issued a subpoena.  Nixon refused to produce and fought all the way to the Supreme Court.  The Supreme Court ordered him to produce.  Nixon ordered Cox to drop the subpoena.  Cox refused.  On October 20, 1973, Nixon ordered Richardson to fire Cox in order to stop the compulsion of the subpoena.  Richardson refused and resigned.  Nixon then ordered the next in line, the Deputy Attorney General, William Ruckelshaus, to fire Cox.  Ruckelshaus refused and resigned.  Nixon then ordered the next in line, Solicitor General Robert Bork (yes, that Robert Bork), to fire Cox.  Bork fired Cox.  That culminating event, happening on a weekend and now enshrined in history as the Saturday Night Massacre, shocked the country and led to Nixon's resignation.

A few days before the Saturday Night Massacre, the Vice-President, Spiro Agnew resigned and immediately thereafter pled nolo contender to a single tax crime.  A nolo contendere plea is sometimes accepted by courts for defendants who will take the punishment but do not want to formally admit that they committed the crime(s).  Agnew could have been indicted for a slew of other crimes, all unrelated to Watergate and stretching back to corruption before he was VP (but continuing while he was VP).  Because of the crisis the country was in, Richardson agreed (over the objection of the federal prosecutors involved) to permit Agnew to plead nolo contendere to a single count of tax evasion with an agreement that he would serve no time and be sentenced only to three years of unsupervised vacation.

The podcast discusses the events leading to the Spiro resignation and plea of nolo contendere to tax evasion in the midst of the Watergate crisis sweeping over Nixon's administration that would soon lead to Nixon's resignation.

Richardson and the prosecutors had to deal with such issues as to (i) whether a sitting VP could be indicted (sound familiar) and (ii) whether, since the evidence of mass corruption by Agnew seemed so strong, should DOJ insist on some jail time either by plea or after indictment and conviction or, on the other hand, was it important to the country to get his resignation which required the sweet deal nolo contendere plea.

I highly recommend the Fresh Air offering.  After listening to the full podcast series, I may offer more.

JAT Comments:

1.  DOJ Tax policy has always been to oppose or strongly resist nolo contendere pleas in tax cases.  Here is the current guidance from the DOJ Criminal Tax Manual, CTM, 5.01[4] Nolo Contendere Pleas, here:
Department of Justice policy requires all prosecutors to oppose the acceptance of a nolo contendere plea. Only in the most unusual circumstances and only after approval by the Assistant Attorney General of the Tax Division, may a prosecutor consent to a nolo plea in a tax case. See United States Attorneys’ Manual, §§ 9-16.010 and 9-27.500.530. The Tax Division prefers a guilty plea because such a plea strengthens the government’s position if the defendant contests the fraud penalty in a subsequent civil tax proceeding. A nolo plea does not entitle the government to use the doctrine of collateral estoppel. If the defendant persists in pleading nolo over the government’s objections, the prosecutor should also oppose the dismissal of any charges to which the defendant does not plead nolo contendere. United States Attorneys’ Manual, §9-27.530.
Note, the USAM has been renamed the U.S. Justice Manual (USJM) with the section numbers the same.

2.  Agnew's prosecution was handled by the USAO for the District of Maryland.  The AUSAs stumbled upon the Agnew involvement in a massive corruption scheme in Maryland.  The bagman reference in the title of the podcast is to the bagmen who sometimes delivered cash to Agnew, even while he was VP.  The AUSAs were not DOJ Tax personnel nor were DOJ Tax attorneys involved (so far as I am aware).  I would suspect that, in their investigation, the AUSAs had IRS CID Agents (now called IRS CI Special Agents) involved because they are the best investigators to follow the money which is at the heart of such corruption.  And, since the ultimate plea was to tax evasion, the IRS and likely DOJ Tax was involved at least to approve the plea deal.  DOJ Tax approval is required in all criminal tax cases.  If anyone has information about the extent of DOJ Tax involvement, please leave a comment below or email me (if by email, please advise whether I have permission to disclose any information; I will not without express permission).

3.  Agnew could have been charged and convicted for other crimes (extortion, etc.).  And, given the longevity of the scheme stretching back until before he was governor of Maryland and the fact that he is not likely to have reported the cash he received over the period, he likely could have been convicted of other tax crimes, some within an applicable statute of limitations.

4.  Beyond the substantive tax and nontax crimes, he also probably could have been charged with and convicted of obstruction by his efforts, assisted by the Nixon White House (and even George H.W. Bush, then heading the Republican Party) to get the US Attorney for USAO Maryland to drop the investigation.  (Sound familiar?)

5.  There are a number of other resonances with current circumstances but I recommend just focusing on this fascinating part of our history.

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