Tuesday, May 11, 2021

Mens Rea in Tax Crimes and Acceptance of Responsibility (5/11/21)

In United States v. Roskovski, 2021 U.S. Dist. LEXIS 84379 (W.D. Pa. May 3, 2021), here, the Court denied (again) Roskovski’s attempt to withdraw his guilty plea for violations of 18 U.S.C. § 1014 (False Statements in a Loan Application) and 26 U.S.C. § 7206(1) (Filing a False Tax Return).  The Counts involved in the plea were Courts 36 and 42; apparently, a lot of counts were dropped in return for the guilty plea to the two counts.  Roskovski claimed that he did not understand the plea as it relates the required mens rea that the Government must prove at trial for the two counts.  Roskovski claimed innocence because “he lacked the necessary intent.”  Among his claims were:

As to the charge of filing a false income tax return, Mr. Roskovski was under the mistaken impression that the mere underreporting of income was sufficient to establish his guilt at trial. [ ] Mr. Roskovski misunderstood from his discussions with prior counsel that preponderance of evidence was not the standard on the intent element to be applied if he were to go to trial. [ ]

As to the charge of making a false statement in connection with a loan application, Mr. Roskovski mistakenly believed that falsity, without the required element of intent proved beyond a reasonable doubt, was also sufficient to establish his guilt at trial. [ ] Mr. Roskovski misunderstood from his discussions with prior counsel the correct burden to be applied at trial, and, as a result, he believed that the mere inclination that he should have known of the falsity was sufficient to prove his guilt at trial. [ ] Mr. Roskovski had a genuine misunderstanding as to the standard for intent for both charges for which he pleaded guilty.

With regard to each, Roskovski alleged "the complex interplay between the burdens of proof required at the conviction versus the sentencing phases in federal fraud cases is a difficult field even for experienced federal legal practitioners, much less laymen."

The Court did not accept the claims and denied the Motion to Withdraw.  The Court thought that Roskovski could just not accept the potential sentencing in the case, particularly after  the Presentence Investigation Report was filed where the potential sentence was forced on his consciousness.

I don’t think there is anything particularly noteworthy about the case except that it raises the mens rea required, particularly for tax crimes with the Cheek definition of willfulness – intentional violation of a known legal duty.  The prosecution must prove that level of mens rea beyond a reasonable doubt.  Roskovski claimed, in effect, that he had not been adequately counseled about the proof required for the mens rea element of the crimes to which he pled and therefore that his plea should not stand because he could not admit the crime with the mens rea element properly understood.

This raises an issue which practitioners sometimes struggle with in explaining to clients the requirements for a guilty plea.  It is not unusual for a client to deny that he had the requisite intent to intentionally violate a known legal duty.  Sure, the client may even admit to the lawyer that, perhaps he knew that what he was doing was not right, but he did specifically intend to violate a legal duty known to him.  Underlying that claim is the client's belief that he is a good guy and would not do that.  Some clients may get stuck in that mentality; if they do, they are going to have considerable difficulty entering a plea.  A plea may be in a client's interests if the facts that the Government can prove at trial are so overwhelming that conviction is likely because the jury will review that evidence and infer the existence of the mens rea required for the conviction.  A principal benefit of a plea is the Guidelines' downward adjustment for acceptance of responsibility ("AOR") which, in addition to the downward reduction, may play well with the sentencing judge in exercising Booker discretion for a downward variance from the Guidelines recommended sentencing range even reduced for AOR.

A related issue as to admitting responsibility arises if the defendant goes to trial and is convicted.  Can the defendant get a sentencing benefit by accepting responsibility?  Equally, important what is the downside to accepting responsibility if the defendant wants to appeal the conviction?

If the defendant mounted a vigorous defense at trial, including possibly testifying as to his innocence, he may have foreclosed the opportunity to accept responsibility that he had denied under oath.  But, if the defendant effectively put on no defense as to his innocence but rested the case on the hope that the judge or jury will determine that the prosecutor had not proved guilt beyond a reasonable doubt, has the defendant foreclosed the practical ability to achieve a benefit with acceptance of responsibility?

Application Note 2 of the applicable guideline (§3E1.1. Acceptance of Responsibility) states:

2.     This adjustment is not intended to apply to a defendant who puts the government to its burden of proof at trial by denying the essential factual elements of guilt, is convicted, and only then admits guilt and expresses remorse. Conviction by trial, however, does not automatically preclude a defendant from consideration for such a reduction. In rare situations a defendant may clearly demonstrate an acceptance of responsibility for his criminal conduct even though he exercises his constitutional right to a trial. This may occur, for example, where a defendant goes to trial to assert and preserve issues that do not relate to factual guilt (e.g., to make a constitutional challenge to a statute or a challenge to the applicability of a statute to his conduct). In each such instance, however, a determination that a defendant has accepted responsibility will be based primarily upon pre-trial statements and conduct.

Although the Application Note relates to the Guidelines acceptance of responsibility downward adjustment, I think it would also apply to the factors a court considers, explicitly or implicitly, in making a Booker variance.

The Application Note says that the AOR adjustment can be asserted after trial and gives the example of where, at trial, the defendant's evidence goes “to assert and preserve issues that do not relate to factual guilt.”  Does this mean that the defendant cannot seek AOR (either under the Guidelines or in Booker consideration) where he argues that the motion for direct verdict should have been granted because the evidence to prove the crime beyond a reasonable doubt was not sufficient to be submitted to the jury?  This is sort of like a due process claim.  Technically, it could be read as a claim that, apart from guilt or innocence of the crime, the prosecutor did not prove the case and therefore, in a sense, it would violate due process to convict or let the conviction stand even if the defendant were to admit for the sentencing benefit that he was guilty of the crime.  Can a defendant accept responsibility for the crime of conviction while on appeal asserting that he should not have been convicted of the crime?  I would appreciate the views of practitioners who have faced this issue.

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