Sunday, December 6, 2020

Eleventh Circuit Rejects a Marinello Claim that Nexus to Pending Proceeding Not Shown (12/6/20)

In United States v. Graham, ___ F.3d ___, 2020 U.S. App. LEXIS 37871 (11th Cir. 2020), here, the Court affirmed Graham’s convictions for (i) passing a fictitious financial instrument, in violation of 18 U.S.C. § 514(a)(2), and (ii) corruptly endeavoring to obstruct the administration of the Internal Revenue Code, in violation of § 7212(a), tax obstruction.  The tax obstruction conviction was the principle point addressed.

Graham raised a Marinello objection that his use of fictitious financial instruments to pay off his substantial tax debt that the IRS had been trying to collect for years.  As stated by the Court “The question for us is whether the IRS's collection activity qualifies as a ‘particular administrative proceeding.’ We hold that it does.”

After reviewing Marinello’s holding, the Court said (Slip Op. 6-9, footnote omitted):

So, the question is, did Graham's submission of a falsified bill of exchange to the IRS have a "relationship in time, causation, or logic" with some administrative proceeding? Graham thinks not. He suggests that "liens, levies, and related notices" do not qualify as "administrative proceedings" under Marinello. A "proceeding," he argues, must "take place over a period of time, akin to a grand jury proceeding or other investigatory proceeding," where there is "summoning of witnesses and documents" and "questioning under oath." And the IRS's tax collection activities do not bear those particular marks.

Our Court has not had occasion to further define the "nexus" requirement since Marinello. But we do not think the Court's definition of a "proceeding" was so narrow. The Supreme Court nowhere suggested that a defendant must interfere with a quasi-judicial proceeding-like Graham describes-to violate the Omnibus Clause. Indeed, the Court was careful not to identify exhaustively what qualified as an "administrative proceeding" or "other targeted administrative action." Id. at 1109-10. Its concern, instead, was to exclude relatively innocuous conduct from prosecution under the Omnibus Clause. Id. The government could not prosecute someone for interfering with "routine, day-to-day work carried out in the ordinary course by the IRS, such as the review of tax returns." Id. There had to be something more-some "targeted administrative action." Id. at 1109.

We need not draw a perimeter setting out what that "something more" encompasses. This is not a borderline case. For years, the IRS took targeted administrative action against Graham well beyond the "ordinary course" of the agency's interaction with taxpayers. It began to take specific steps to collect on Graham's tax debt in 2009. It assigned two revenue officers to his case over a five-year period. These officers issued him notices of liens and levies. They oversaw seizure and sale of some of his property. And only weeks before Graham submitted the international bill of exchange, the IRS sent him another notice of levy reminding him that he owed about $3.6 million. He even attached a copy of this notice to the $3.6 million bill of exchange that he provided to the IRS. The IRS's regular and persistent contact with Graham went well beyond the "routine, day-to-day work" of the agency and we have no difficulty concluding that this collection action qualified as a "targeted administrative action." See id. at 1109- 10.

Nor do we think there is any merit to Graham's second argument that no nexus existed. On appeal-for the first time-Graham argues that there was also no nexus between his submission of the bill of exchange and the IRS's collection action because his actions did not have the "natural and probable effect" of "doing anything to any lien, levy or seizure." In other words, since his plan was so bad that it had no chance of working, he should get off scot-free.

We don't buy it. Since Graham failed to raise this issue before the district court, we review this new challenge only for plain error. United States v. Baston, 818 F.3d 651, 664 (11th Cir. 2016). Neither the Supreme Court nor our Court has ever read a "likelihood of success" element into § 7212(a). Our Court has held that the "government is not required to prove that the administration of the internal revenue laws was actually obstructed or impeded, but only that the defendant corruptly attempted to do so." Croteau, 819 F.3d at 1308 (emphasis added). When the "explicit language of a statute or rule does not specifically resolve an issue, there can be no plain error where there is no precedent from the Supreme Court or this Court directly resolving it." United States v. Lejarde-Rada, 319 F.3d 1288, 1291 (11th Cir. 2003). Since Graham points to nothing in § 7212(a) itself nor any binding precedent requiring the government to show Graham's plan was likely to succeed, we must affirm the district court.

JAT Comment:

1.  There seems to be nothing unexpected in this holding.  I guess the Court treated it as a precedential opinion because the Court had not previously addressed the Supreme Court holding in Marinello. The Court did not read Marinello's nexus requirement restrictively, and perhaps wanted to signal that to courts in the Eleventh Circuit.

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