S.G. Files Brief in Opp to Petition for Certiorari in Flynn (5/19/21; 6/17/21)

I noted previously that a petition for certiorari was filed in United States v. Flynn, 969 F.3d 873 (8th Cir. 2020), cert. docketed, 20-1129 (Feb. 17, 2021) and that the Government was to file an answer on May 19, 2021.  See Fifth Circuit Holds that the Defraud/Klein Conspiracy Does Not Have Pending Proceeding Element; Update on Cert Petition in Related Case (Federal Tax Crimes 5/8/21), here.  The Solicitor General filed the answer today, a Brief in Opposition, here.

Just to review the bidding as of today, the following key documents are on file per the docket entries, here (where the various documents can be reviewed and downloaded).

• The petition was filed 2/11/12.
• An amicus brief in support of the petition was filed by the New York Council of Defense Lawyers on 5/2/21. 
• The S.G. Brief in Opp was filed on 5/19/21.
• Flynn's Reply Brief filed on 6/7/21.  (Added to Blog 6/17/21)

The Brief in Opp is 26 pages long (substantially longer than the Briefs in Opp I drafted while with DOJ Tax Appellate, but word inflation has crept into my writings since then).  The key issue that I think readers of this blog would be most interest is (p. (I), p. 2 of the pdf):

2. Whether a charge of conspiring to defraud the United States in violation of 18 U.S.C. 371 is void for vagueness absent a requirement that the government prove a nexus between a defendant’s conduct and a particular administrative proceeding.

This issue is basically the Marinello issue I mentioned in my earlier blog.

Flynn, in the petition for certiorari, stated the issue as follows (p. i, p. 2 of the pdf):

II. Whether the requirement for a nexus between a particular administrative proceeding and a taxpayer’s conduct is necessary to save the constitutionality of a conviction under an 18 U.S.C. § 371 conspiracy to defraud the Internal Revenue Service (Klein Conspiracy) after this Court’s decision in Marinello v. United States, 138 S. Ct. 1101 (2018).

The Government states it arguments on pp. 15-23 (pp. 22-30 of the pdf).  Basically, the arguments are:

First, the Court has approved the broad interpretation of the defraud / Klein conspiracy in Haas v. Henkel, 216 U.S. 462, 479 (1910) and Hammerschmidt v. United States, 265 U.S. 182 (1924) by interpreting the word “defraud” outside its usual meaning in criminal statutes to mean “primarily to cheat the [g]overnment out of property or money [the usual meaning], but it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest.”  Quoting Hammerschmidt.  Basically, the Government argues that the “deceit, craft and trickery” language addresses the types of fair notice issues that the court addressed in Marinello.

One argument deployed in this reliance on Haas and Hammerschmidt was the legislative reenactment doctrine (although not called by that name in the Brief).  The S.G. argues (pp. 18-19):

Congress codified the current conspiracy statute in 1948, see Act of June 24, 1948, ch. 645, 62 Stat. 701 (enacting 18 U.S.C. 371), by which time this Court’s interpretation of the phrase “defraud the United States in any manner or for any purpose” was already well-established. See Haas, 216 U.S. at 479-480; Hammerschmidt, 265 U.S. at 187-188; Glasser, 315 U.S. at 66. By incorporating that language into Section 371, Congress manifested its intent to incorporate the preexisting definition provided by this Court’s decisions. “Congress is presumed to be aware of an administrative or judicial interpretation of a statute and to adopt that interpretation when it re-enacts a statute without change.” Lorillard v. Pons, 434 U.S. 575, 580 (1978). Congress made no relevant change; if anything, it broadened the language of Section 371—which prohibits conspiring “to defraud the United States, or any agency thereof in any manner or for any purpose,” 18 U.S.C. 371 (emphasis added)—since Haas was decided. See Haas, 216 U.S. at 479 (quoting Rev. Stat. § 5440 [*19] (1901), which did not then specifically refer to agencies). And Congress’s adoption of this Court’s definition of the defraud clause refutes petitioner’s contentions that a defraud-clause conspiracy is a “court-created,” “common law crime,” rendered void by the principles this Court applied in United States v. Davis, 139 S. Ct. 2319 (2019). Pet. 20-24 (emphasis omitted).

There are, of course, counterarguments.  The legislative reenactment doctrine applies to statutory interpretations by courts and agencies, so the same rules should apply.  My quick research picked up Brown v. Gardner, 513 U.S. 115, 120-21 (1994) which said that (cleaned up) “the record of congressional discussion preceding reenactment makes no reference to the VA regulation, and there is no other evidence to suggest that Congress was even aware of the VA's interpretive position. In such circumstances we consider the re-enactment to be without significance.” The S.G. offers no indication that, in codifying the criminal code, including the conspiracy statute, that Congress was aware of the Haas and Hammerschmidt interpretation in issue here.

Second, the S.G. offers (Brief p. 22) a standard argument that, “Even if the longstanding and uniform interpretation of Section 371 warranted reconsideration, this case would be an unsuitable vehicle for it.”  I can’t imagine any case in which the argument was fairly presented that the S.G. would agree that the case at hand was the one the Supreme Court should take.  I think these are make-weight arguments.  If the issue is an appropriate issue for consideration by the Court, the Flynn case is an appropriate case.

Added 6/17/21 1:00pm:

In Flynn's reply brief filed 6/ 7/21, in arguing that the court on accepting the plea did not adequately explain the charges, Flynn says (p. 4 n. 3, bold face supplied):

None of these circuits would have approved Petitioner's plea in a complex Klein Conspiracy where the circuits disagree as to the elements.n3
   n3 The government's attempt to minimize the circuit differences as to the mens rea element should be rejected. The object of the conspiracy here was the evasion of tax. Citing United States v. Coplan, 603 F.3d 46 (2d Cir. 2012), cert. denied, 571 U.S. 819 (2013), Petitioner correctly contends that, by alleging evasion was the sole object of the Klein Conspiracy, the government was required to establish the elements of this offense. See also United States v. Foote, 542 F.3d 1088, 1098 (5th Cir. 2008) (collecting authorities).

I read this as arguing that, rather than a Klein conspiracy which is a defraud conspiracy, the conspiracy charged was an offense conspiracy to commit a substantive statutory crime (tax evasion).  The problem with that argument (other than technical ones noted in the next paragraphs of this blog) is that the more important substantive argument on the Flynn petition for certiorari requires a Klein / defraud conspiracy rather than an offense conspiracy.  So, I am confused as to why Flynn is arguing in the footnote that an offense conspiracy was charged.

I caution readers that the citation in the footnote is wrong.  The case is United States v. Porter, 542 F.3d 1088, 1098 (5th Cir. 2008), here, and the cited discussion is in the dissenting opinion.  The relevant portion of the dissenting opinion cites United States v. Foote, 413 F.3d 1240, 1250 (10th Cir. 2005).  Further, the statement is not correct in urging that an offense conspiracy must prove the elements of the substantive offense, for the offense conspiracy is a separate crime and does not require completion of  the substantive offense that was the object of the offense.  The offense conspiracy does import the mens rea element required for the substantive offense. Ingram v. United States, 360 U.S. 672, 678 (1959) (“Conspiracy to commit a particular substantive offense cannot exist without at least the degree of criminal intent necessary for the substantive offense itself.”)  Hence for a substantive offense with a Cheek-type willful element (as most IRC tax crimes have), the offense conspiracy requires that the defendant act willfully in the Cheek sense-- with intent to violate a known legal duty.

Finally, I should note in regard to the mens rea element of Klein / defraud conspiracies that the Government has argued that the mens rea element for the defraud conspiracy is not the same as for the willful element imported into offense conspiracies.  See DOJ CTM 23.07[1][b] Scope of Defraud Clause, here (quoting United States v. Alston, 77 F.3d 713, 720-21 (3d Cir. 1996) ("a true Klein conspiracy under the 'defraud' clause does not generally require proof of knowledge of illegality," which is an essential element of the willful requirement in most substantive tax crimes).