Tuesday, January 14, 2020

Fifth Circuit Affirms Republican Congressman Conviction for Crimes Including Tax Perjury (1/14/20)

In United States v. Stockman, ___ F.3d ___, 2020 U.S. App. LEXIS 851 (5th Cir. 2020), here, the Fifth Circuit affirmed Stockman’s convictions of four counts of mail fraud, three counts of wire fraud, two counts of making false statements in FEC filings, eleven counts of money laundering, one count of conspiracy to make conduit campaign contributions and false statements, one count of causing an excessive campaign contribution, and one count of filing a false tax return.  Stockman was a former congressman (Republican).

The only item that I found interesting, more as a reminder rather than as new to readers of this blog, was the rejection of Stockman’s complaint that he should have received a “good faith” instruction for crimes (including the tax crime) with willful conduct as an element of the crime.  Stockman alleged his “good faith” reliance on his tax professional.  The relevant discussion from the Fifth Circuit opinion is (Slip Op. at 17-19 (cleaned up)) :
We next consider Stockman's argument that his tax and campaign finance convictions under Counts 10, 11, 12, and 28 of the indictment were tainted by the district court's refusal to instruct on "good faith." Stockman points to evidence that he relied on an accountant who "wrongly advised him that having aides contribute money to his congressional campaign in the name of their parents was permissible." He also points to evidence that Stockman and Posey intentionally omitted words of express advocacy from The Conservative News in order to comply with FECA. He asserts that in this context and where willfulness is required, a good faith instruction should have been given. 
Again, we disagree. Although the parties dispute the standard of review applicable to the district court's refusal to instruct on good faith, decisions of this court and the Supreme Court show that the refusal was not erroneous, whether reviewed de novo or for plain error. See United States v. Pomponio, 429 U.S. 10, 11-12 (1976); United States v. Simkanin, 420 F.3d 397, 409-11 (5th Cir. 2005). Stockman argues that a good faith instruction should have been issued because the tax and campaign finance offenses [*18]  in question all require a showing of "willfulness." 
But it is precisely that requirement that renders any such instruction unnecessary. The Supreme Court held in Pomponio that an additional good faith instruction is not required when the charge already requires proof of "willfulness," properly cabined to cover only voluntary, intentional violations of known legal duties. In so holding, the Court gave its approval to a charge that did not instruct on good faith but did instruct on the need for proof of a "willful" act, meaning an act done voluntarily and intentionally and with the specific intent to do something which the law forbids, that is to say with the bad purpose either to disobey or disregard the law.  Drawing from Pomponio, we held in Simkanin that a "specific instruction" on good faith is not required when the concept is sufficiently subsumed by a general instruction on "willfulness." Simkanin, like Pomponio, approved of instructions alerting the jury to the fact that a "willful" act is done voluntarily and deliberately, with the intention of violating a known legal duty. 
Here, the district court's instructions [*19]  mirrored those in Pomponio and Simkanin. With respect to Counts 10, 11, and 12, the district court instructed the jury that to act "willfully," the defendant must act "voluntarily and purposely, with the specific intent to do something the law forbids, that is, with the bad purpose either to disobey or disregard the law." With respect to Count 28 [the tax perjury count], the district court instructed the jury that it could not convict unless it found that Stockman acted "with intent to violate a known legal duty." We find no merit in Stockman's "good faith" argument.
JAT Comments:

1.  I have reiterated this point in several blogs that the standard “willful” instruction will resolve any problem with failure to give specific good faith instructions (including reliance on tax professional).  E.g., Court Affirms Denial of Reliance on Tax Professional Jury Instruction (Federal Tax Crimes Blog 1/9/20), here.  Of course, a defendant will likely want some specific instruction because in many cases defense counsel imagine that it merely by mentioning the instructions a specific defense otherwise within the ambit of the standard Cheek willful instructions a jury may infer that the judge is signaling some credibility for the good faith defense.  Whether that imagination of jury inference is good or not is beside the point.  In many cases, the specific good faith instruction won’t hurt and might help.

2.  Nevertheless, there are cases that hold that, when the facts raise the defendant's good faith, it would be error to refuse a good faith instruction.  See Good Opinion on Error in Not Giving Requested Good Faith Belief Instructions (3/29/14), here, discussing United States v. Montgomery, 747 F.3d 303 (5th Cir. 2014), hereMontgomery, however, affirmed despite failure to give the instruction despite the error because, the Fifth Circuit concluded, the error was harmless.  As is usually the case, the time to win these types of battles are in the district court  rather than on appeal.  Both the majority and dissenting opinions offer good sound bites for practitioners trying to obtain the good faith instruction.

3.  For other blogs that cover various aspects of the issue, see (in reverse chronological order):

  • Good Faith as a Defense to Tax Crimes (Federal Tax Crimes Blog 2/9/13), here.
  • Making a Cheek Good Faith "Defense" Without Testifying (Federal Tax Crimes Blog 11/24/11), here.
  • Willfulness and Good Faith Defense - an Oxymoron? (Federal Tax Crimes Blog 12/29/09), here.

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