Saturday, January 18, 2020

Marinello in the Courts – An Update (1/18/20)

Jeremy Temkin, a prominent tax/white collar crime attorney, has published this excellent article:  Two Years Later: Have Defendants Benefited From ‘Marinello’?, 263 NYLJ No. 11 (1/16/20), here.  The law firm posting regarding the article with the link is here.  Temkin’s bio is here.

The article is short, so all interested in the current state of Marinello in the courts should read the article.

JAT Comments:

1.  Temkin reports that results in the cases are mixed.  Marinello has not produced a wave of reversals.  Of course, the Government might have conceded many § 7212(a), tax perjury, convictions that never produced opinions published in the various legal publications.

Some of the cases, like Takesian, which I wrote on recently, did not produce a reversal because ““Takesian could reasonably foresee that an IRS investigation of him was (in Marinello's phrasing) ‘at least . . . in the offing,’” See First Circuit Affirms Tax Obstruction Conviction (Federal Tax Crimes Blog 1/9/20), here.

2.  Marinello-based reversals or Government concessions of the tax obstruction count often would have no bottom-line effect because of other counts of conviction.  In order to test this, the actual sentencing calculations and the Court’s discretionary Booker variances would have to be considered.  I have not done that.  But I did previously note that in Marinello itself, the other counts of conviction likely would permit the same sentencing result.  See Supreme Court Holds that Omnibus Clause of the Tax Obstruction Crime (§ 7212(a)) Requires Awareness of Pending Tax-Related Proceeding (3/21/18; 3/22/18), here, point 4 in JAT comments; see also Dealing with Other Counts of Conviction After Vacating Tax Obstruction Based on Marinello (Federal Tax Crimes Blog 6/26/18), here.
3.  One interesting point that Temkin makes is the issue of whether the Marinello interpretation of tax instruction to require a pending investigation (or expectation of one) is an element of the offense that must be pled in a certain way in the indictment and proved at the trial beyond a reasonable doubt.  Temkin reports that the Government’s position is that the Marinello interpretation is not an element of the crime but rather “establishes an evidentiary and level-of-proof benchmark that the Government must meet at trial.”  I just point readers to Temkin’s discussion. I haven’t fully thought through that issue, so will not comment.

4.  On a related point of the Marinello's effect on Government charging decisions, obviously for tax prosecutions since Marinello, we should expect that the charges made will reflect the decision.  In most cases, the Government has other tax-related crimes it could charge, so that eliminating tax perjury in cases where there is no actual or expected investigation may just mean that the target gets charged anyway with other counts (of a type that might have been charged anyway along with tax perjury) and, given the way the Sentencing Guidelines work, will likely receive the same sentence if convicted.  In other words, the Guidelines are indifferent as to the number of counts, provided that the resulting sentencing range (driven principally by the tax loss for counts of conviction and relevant conduct) is not in excess of the aggregate sentence allowed by the counts of conviction. 

5.  In the latter regard as to charging decisions, keep in mind that the conduct criminalized under § 7212(a), tax perjury, even under the pre-Marinello interpretation substantially overlapped with the Klein / defraud conspiracy, 18 USC 371, as interpreted.  In a prior version of the DOJ Criminal Tax Manual (CTM), DOJ Tax asserted that tax obstruction may be charged where the Klein / defraud conspiracy is “unavailable due to insufficient evidence of conspiracy.”  CTM 17.02 (2001 ed.).  That statement is now omitted in the 2012 edition and, I think, in the 2008 edition.  I don't think that omission is a concession of the point that the conduct criminalized as tax perjury substantially is the same as the conduct criminalized as the Klein / defraud conspiracy, so that if the prosecutor can identify (conjure up) at least two actors in the conduct, it can essentially charged the equivalent of the tax perjury crime without Marinello's limitations to the pending investigation.  I have argued that Marinello's reasoning might apply to the Klein / defraud conspiracy.  What Are the Implications for Marinello on the Defraud / Klein Conspiracy? (3/24/18), here.  The Courts, however, have not (yet) accepted that expansion of Marinello.   See e.g., United States v. Flynn (D. Minn. Decision dated 1/8/19), GS here; United States v. Parlato (W.D. N.Y. Decision dated 2/28/19), GS here; and United States v. Herman (W.D. Tex. opinion dated 4/24/19), GS here.  So, based upon the trajectory to date, my argument is wrong.  But, what that opens up is the possibility that conduct now proscribed by Marinello as tax perjury can be charged as Klein / defraud conspiracy--just find one more actor, called a co-conspirator.

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