District Court Rejects Motions for Acquittal and New Trial on Tax Perjury Convictions (6/29/22)

In United States v. Thompson, No. 21-cr-00279-1, 2022 U.S. Dist. LEXIS 99469 (N.D. Ill. June 3, 2022), CL here, the court denied Thompson's motions for acquittal and, in the alternative, a new trial. Thompson had been convicted of "two counts of making a false statement with the intent to influence the Federal Deposit Insurance Corporation (the FDIC) and a mortgage lending business, in violation of 18 U.S.C. § 1014, and five counts of filing a false tax return, in [*2]  violation of 26 U.S.C. § 7206(1)."

I focus on certain tax aspects of the opinion, although I note that the court held (Slip Op. 28-38) that, for the § 1014 conviction in the Seventh Circuit, literal falsity was not required. 

Special Agents Assisting the Grand Jury Make Surprise Visit.

As often happens in a tax investigation, IRS CI Special Agents make a surprise early morning visit, which is often the target's or subject's first indication of the investigation, designed to catch him or her off-guard and, even when given the modified Miranda warnings, more amenable to an interview without counsel. Here is the court's description of that interview. In this case, the Special Agents were, respectively FDIC and IRS Special agents, and were assistants to a grand jury rather than agents conducting agency administrative investigations.

             At 8:15 a.m. on December 3, 2018, Evans [Special Agent with the FDIC Office of Inspector General] and Special Agent Jason Gibson (Gibson), [*13]  with IRS Criminal Investigation, visited Thompson at his house unannounced to interview him. Tr. 935:16-936:4, 944:12-19. Evans testified that, during the interview, they discussed Thompson's loan at Washington Federal, Evans and Gibson asked him questions about the loan, and Thompson provided information about the loan. Tr. 938:16-25. Specifically, Evans told Thompson that he was investigating Washington Federal, but he never told Thompson that Thompson himself was the subject of an investigation or that Thompson's taxes or tax deductions were the subject of an investigation. Tr. 950:23-951:8. At some point during or at the end of the interview, Gibson served Thompson with a grand jury subpoena that called for Thompson to appear and provide records, including but not limited to federal tax records and records used to prepare federal tax returns, loan and credit applications, records related to the purchase of Thompson's primary residence, his rental residence, and a third property located in Michigan. Tr. 939:1-22, 941:9-942:6, 948:19-22; GX 411.

I infer that, although not expressly stated, Thompson was at least a subject of the grand jury investigation. The opinion does not state whether he was given modified noncustodial Miranda warnings or whether Thompson made incriminating admissions during the interview. I have to assume that defense counsel made whatever he could from the described event.

 Denial of Good Faith Jury Instruction for Tax Perjury.

 The court addressed this issue (Slip Op. 79-81):

            In cursory fashion, Thompson argues that the Court erred by failing to give Thompson's requested good faith jury instruction relating to the tax charges. Mot. Post-Trial at 25 (citing R. 135). Before trial, Thompson requested that the Court give a good faith instruction to the jury stating that, if Defendant believed in good faith that he was acting within the law, he did not make a false statement on a tax return as charged in Counts III through VII. R. 56. The Court deferred ruling [*80]  until trial, and after the close of evidence, the Court declined to give Thompson's proffered good faith instruction. R. 135, Jury Instruction Order at 1-2. The Court agreed with the Government that the instruction was not mandated by Cheek v. United States, 498 U.S. 192, 201, 111 S. Ct. 604, 112 L. Ed. 2d 617 (1991), and that, based on the evidence introduced at trial, Thompson's proffered good faith instruction was not warranted. Id. at 1. The Court instructed the jury as to the definition of willfulness. Tr. 1327:8-22 (instructing jury that to find Thompson guilty of Counts III through VII, the jury must find that Thompson acted willfully, meaning that "he knew he had a legal duty to file a truthful tax return, but when he signed the return, he did not believe it was truthful as to a material matter").

            The Seventh Circuit has held that the good faith instruction is not required when the jury is instructed on willfulness and evidence did not support the instruction. Resp. at 25 (citing United States v. Kokenis, 662 F.3d 919, 929-30 (7th Cir. 2011) (willfulness instruction "necessarily encompassed the defense theory of good faith" as the "jury could not find both that [defendant] acted willfully as defined in the instructions and that he acted in good faith") (emphasis in original)). As the Court stated in its previous Order, [*81]  no evidence was presented that Thompson did not know the law or that he misunderstood the law. Jury Instruction Order at 1-2. As a result, the Court finds that a new trial is not warranted based on the Court's refusal to give Thompson's proffered good faith instruction.

Apparently Thompson did not testify (see Slip Op. 72 n 17). 

 Although, as I have noted, it is wrong that a good faith defense requires a defendant to testify, the question here is and under what circumstances a defendant is entitled to a good faith jury instruction in addition to the standard Cheek willfulness instruction. To be sure, with just the standard Cheek willfulness instruction, a jury believing the defendant acted in good faith is unlikely to convict. Still, when is a specific good faith instruction in addition to the standard Cheek willfulness instruction required or, if not required, prudent in the trial court's discretion?

I think that, even when the defendant does not testify, there must be some evidence which, if believed by the jury, indicates that the defendant acted in good faith.

I will just refer readers to some of the more important blogs on variations of this issue (in reverse chronological order):

• Fifth Circuit Sustains Convictions Despite Trial Judge's Refusal to Give Proper Cheek Willfulness Instruction (Federal Tax Crimes Blog 11/21/15; 11/22/15), here.
• Good Opinion on Error in Not Giving Requested Good Faith Belief Instructions (Federal Tax Crimes Blog 3/29/14), here.
• Fourth Circuit Reverses Tax Obstruction Conviction Because of Bad Instruction and Affirms Denial of Good Faith Instruction for False Claim Conviction (Federal Tax Crimes Blog 11/20/13), here.
• Good Faith as a Defense to Tax Crimes (Federal Tax Crimes Blog 2/9/13), here.
• Jury Instructions in Tax Obstruction and Klein Conspiracy Case (Federal Tax Crimes Blog 2/6/13), here.
• Making a Cheek Good Faith "Defense" Without Testifying (Federal Tax Crimes Blog 11/24/11), here.
• Sixth Circuit on Klein Conspiracy and Tax Evasion (Federal Tax Crimes Blog 9/16/10), here.
• Willfulness and Good Faith Defense - an Oxymoron? (Federal Tax Crimes Blog 12/29/09), here.