Thursday, January 9, 2020

First Circuit Affirms Tax Obstruction Conviction (1/9/20)

In United States v. Takesian, ___ F.3d ___, 2019 U.S. App. LEXIS 37571 (1st Cir. 2019), here, the Court opens with this:
Greg Takesian is a certified-public-accountant-turned-tax-cheat. Or so a jury essentially concluded in convicting him of four counts of filing false tax returns, see 26 U.S.C. § 7206(1), and one count of attempting to obstruct the internal-revenue laws, see 26 U.S.C. § 7212(a). A district judge at sentencing hit him with concurrent prison terms of 24 months on each count, 12 months of supervised release following the end of his incarceration, a special assessment of $100 on each count, a $10,000 fine, and restitution totaling $286,433. None too happy with these results, Takesian argues here that the judge thrice erred: first, by letting prosecutors impeach him with his 2006 conviction for making a false statement; second, by failing to tell the jury that to convict on the obstruction count, prosecutors had to prove that he obstructed a particular tax-related proceeding that he knew about or could reasonably foresee; and third, by ordering restitution beyond what the jury found the government's tax loss to be. Disagreeing with him, we affirm.
Two of the issues on appeal may be interesting to readers of this blog – first, a Marinello issue and second, a restitution issue.


Readers will recall that, in Marinello v. United States,138 S. Ct. 1101 (2018), here, the Court held that the obstructive acts for a conviction of tax perjury under § 7212(a), required that the Government prove that the defendant acted to obstruct a known or foreseeable investigation.  Marinello was decided after the trial in Takesian.  Takesian argued that he was entitled to a Marinello-based instruction which he did not get.  The Court rejected the argument, although agreeing with the parties that the failure to give instruction the Marinello instruction was plain error.  Plain error requires that Takesian must still prove that the error jeopardized his substantial rights–that the defendant show “‘a reasonable probability" that the flawed instruction led to a flawed conviction.”  Basically, the Court found the from the facts showed that “Takesian could reasonably foresee that an IRS investigation of him was (in Marinello's phrasing) ‘at least . . . in the offing,’” For that reason, he cannot show that the jury would have acquitted with a proper instruction.


Takesian objected to the restitution award of $286,433.  In an unusual procedure, the trial judge submitted to the jury not only the standard questions for guilty or not guilty but also sentencing factors (including most prominently, the tax loss).  The Court explains:
We should probably say a word about why the judge did what he did here. The government tells us without contradiction that this judge's practice is to "submi[t] . . . sentencing factors to the jury under a beyond-a-reasonable-doubt standard." And the verdict form that he used listed seven tax-loss ranges — each corresponding to an offense level, which helps set a convicted person's advisory prison range under the federal sentencing guidelines. See USSG § 2T4.1. No party complains about this procedure. So we have no occasion to weigh in on it.
Although the Court won’t weigh in on it directly, I don't think the Court was enamored of the procedure.  The problem, as the court notes, with that procedure is that, as submitted to the jury, the sentencing factors (including tax loss) were decided by the jury on a beyond a reasonable doubt standard.  Under the Sentencing Guidelines, however, sentencing factors are determined by the judge on a preponderance of the evidence standard.  So, when the jury in Takesian determined a range of loss between $100,000 and $250,000 beyond a reasonable doubt, the judge could then still determine a greater loss for sentencing than $250,000 if the evidence so established by a preponderance of the evidence.  The judge did determine a greater loss, specifically $286,433.  And, the Court concludes by saying: “Takesian never argued here that the evidence did not suffice to allow the judge to find by a preponderance of the evidence that he owed $286,433 in restitution, thus waiving any such argument.”

In so holding, the Court said that its prior decision in United States v. Pena, 910 F.3d 591 (1st Cir. 2018), here, would have doomed the argument had Takesian made it because of the different standards of proof.  Of course, setting Pena aside, it is a truism that the higher tax loss determined by a preponderance of the evidence would control over a tax loss determined beyond a reasonable doubt.  And Pena does have language to that effect (although it should be evident from the Guidelines).

And, not to get too deeply in the weeds, most readers probably already know that restitution under the MVRA can generally be awarded only for losses related to counts of conviction or or, in the case of counts of conviction with “an element of a scheme, conspiracy, or pattern of criminal activity,” losses of persons directly harmed by such conduct.  I think that is what happened in Pena (see pp. 603-604).  I think, however, that the Takesian court's discussion of Pena may have missed this point.

Finally, although the Court did not weigh in on the procedure of submitting the sentencing factors to the jury, I will.  First, since sentencing factors are determined by a preponderance of the evidence, submitting sentencing factors like tax loss produces a form of jury dicta and indeed irrelevant dicta.  Second, although the Court of Appeals does not say what sentencing factors were submitted to the jury beyond the tax loss, it would appear that not all sentencing factors are susceptible to jury determination.  For example, the Specific Offense Characteristics in §2T1.1(b) for income from criminal activity and sophisticated means would require unnecessary jury instructions.  And the list could go on for the factors Chapter 3 and Chapter 4 factors.  I think the procedure is weird, but perhaps others have observed it work before and can offer comments to this blog on the procedure.

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