Trump Superseding Indictment: More on the Defraud / Klein Conspiracy (8/28/24)

The D.C. grand jury approved a superseding indictment against former President Trump (“Trump”). The superseding indictment is on CourtListener here. The principal purpose of the superseding indictment is to eliminate charges that might implicate the President’s immunity as stated in Trump v. United States, 603 U. S. ____, 144 S. Ct. 231 (2024).

The Introduction to the superseding indictment contains a good summary on the issue I discuss in this blog – the defraud conspiracy in 18 U.S.C. §371 (Superseding Indictment pp. 1-3, ¶¶ 1-5).

INTRODUCTION

          1. The Defendant, DONALD J. TRUMP, was a candidate for President of the United States in 2020. He lost the 2020 presidential election.

          2. Despite having lost, the Defendant-who was also the incumbent President-was determined to remain in power. So, for more than two months following election day on November 3, 2020, the Defendant spread lies that there had been outcome-determinative fraud in the election and that he had actually won. These claims were false, and the Defendant knew that they were false. But the Defendant used his Campaign to repeat and widely disseminate them anyway-to make his knowingly false claims appear legitimate, create an intense national atmosphere of mistrust and anger, and erode public faith in the administration of the election.

          3. As a candidate and a citizen, the Defendant had a right, like every American, to speak publicly about the election and even to claim, falsely, that there had been outcome determinative fraud during the election and that he had won. He was also entitled to formally challenge the results of the election through lawful and appropriate means, such as by seeking recounts or audits of the popular vote in states or filing lawsuits challenging ballots and procedures. Indeed, in many cases, the Defendant did pursue these methods of contesting the election results. His efforts to change the outcome in any state through recounts, audits, or legal challenges were uniformly unsuccessful.

          4. Shortly after election day, the Defendant also pursued unlawful means of discounting legitimate votes and subverting the election results. In so doing, the Defendant  perpetrated three criminal conspiracies:

                   a. A conspiracy to defraud the United States by using dishonesty, fraud, and deceit to impair, obstruct, and defeat the lawful federal government function by which the results of the presidential election are collected, counted, and certified by the federal government, in violation of 18 U.S.C. § 371;

                   b. A conspiracy to corruptly obstruct and impede the January 6 congressional proceeding at which the collected results of the presidential election are counted and certified ("the certification proceeding"), in violation of 18 U.S.C. § 1512(k); and

                   c. A conspiracy against the right to vote and to have one's vote counted, in violation of 18 U.S.C. § 241.

Each of these conspiracies-which built on the widespread mistrust the Defendant was creating through pervasive and destabilizing lies about election fraud-targeted a bedrock function of the United States federal government: the nation's process of collecting, counting, and certifying the results of the presidential election ("the federal government function").

          5. In furtherance of these conspiracies, the Defendant tried-but failed-to enlist the Vice President, who was also the Defendant's running mate and, by virtue of the Constitution, the President of the Senate who plays a ceremonial role in the January 6 certification proceeding.

The principal charge is the defraud conspiracy summarized in ¶ 4.a. and spelled out in detail in Count One, pp. 3-33, ¶¶ 6-100. (The other conspiracy charges are offense conspiracy charges (¶ 4.b. & c.; Counts Two and Four (p. 34, ¶¶ 101 & 102, and p. 36, ¶¶ 103-104, respectively). The defraud conspiracy is often referred to in tax settings as the Klein conspiracy after setting.  United States v. Klein, 247 F.2d 908 (2d Cir. 1957), cert. denied 355 U.S. 924 (1958) (although the description Klein conspiracy is often used for nontax criminal charges of the defraud conspiracy).

The defraud conspiracy is a common charge where the gravamen of the charges relate to tax administration objects. I have often written about the defraud conspiracy over the years. Contrary to the usual requirement in criminal statutes for fraud to involve some monetary or property object, the defraud conspiracy does not require a conspiratorial object involving actual fraud. See Is It Too Much to Ask that the Defraud Conspiracy Crime Require Fraud? (Federal Tax Crimes Blog 8/3/24; 8/6/24), here. I collect at the end of this blog some of the more relevant earlier blog entries on this issue.

There are at least two factors that might make Trump’s case a possible opportunity for the Supreme Court to now address the issue of the expansive scope of the defraud conspiracy: (i) this Court’s (at least the conservative majority of this Court’s) desire to limit Trump’s criminal exposure (an inference I draw from Trump v. United States, 603 U. S. ____, 144 S. Ct. 231 (2024)) and (ii) the Supreme Court’s relatively recent general narrow reading of criminal statutes (e.g., McDonnell v. United States, 579 U.S. 550 (2016)). (For an interesting recent discussion of McDonnell, see Barry Goldman, Defining Corruption Down (3 Quarks Daily 8/20/24), here.)

I wonder whether the Supreme Court may now be willing to address the atypical reading of the defraud conspiracy and interpret the defraud conspiracy to require an object of money or property. There are no such allegations related to Trump's defraud conspiracy Count One (although when Trump is involved one can be sure that somewhere in the background there is monetary gift / object involved, not unlike the joke attributed to President Reagan that where there is a pile of horse manure, there must be a pony in there somewhere, see here). Of course, it will be well into the next administration before Trump would raise the issue to the Supreme Court. And, the issue in a Trump setting might be avoided altogether if Trump wins and acts to make the criminal case go away by some maneuver within or allegedly within his powers as President. And, then there is always the ultimate out for all criminal charges to go away if the Trump dies before trial and conviction. Finally, all of the damning allegations for the defraud conspiracy are realleged by reference in the offense conspiracy charges in Counts Two and Four, so the underlying facts as is often the case with criminal charges support other charges that remain even if one or more charges are dismissed.

JAT Comments:

1. I offer the following from Michael Saltzman and Leslie Book, IRS Practice and Procedure (Thomsen Reuters 2015), at ¶ ¶ 12.03[1][c][i][A] The dangers in conspiracy charges (footnotes omitted; I am the principal author of that Chapter):

Conspiracy charges are frequent charges accompanying traditional tax crimes to permit the government to increase its chances of obtaining a conviction. The conspiracy concept is “elastic, sprawling, and pervasive offense,” and “so vague that it almost defies definition.”225 The mere allegation of a “conspiracy” has a sinister connotation.226 The law treats a conspiracy as a serious criminal act independent of any offense that might be the object of the conspiracy.227 Herding a gaggle of defendants into a single case with an overarching conspiracy charge may make it difficult for the jury to consider independently the guilt or innocence of each defendant and invite a finding of guilt by association. Conspiracy cases tend to be more complex as the government mounts extensive evidence, sometime tenuous, to connect the dots — real or imagined — among the alleged conspirators, particularly, for example, in allegedly large conspiracies such as those involving widely-promoted large tax shelters.228 The government can obtain convictions for substantive crimes committed by co-conspirators within the scope of the conspiracy.229 The government can admit in the trial statements of co-conspirators that would otherwise be inadmissible hearsay, obtains a relaxed standard of proof and relevancy, is able to toll or refresh the statute of limitations by actions of remote participants, and may obtain venue in remote judicial forums of the government's choosing.230 With all of these benefits and more,231 Judge Learned Hand long ago noted that conspiracy is “the darling of the modern prosecutor's nursery.”232

Not surprisingly, therefore, the government charges conspiracy often.233 The conspiracy count allegations are framed as a cascade of allegations telling a damning story. This contrasts with counts for the tax offenses, which are dry, sparse, boring, and usually not even flowered up for dramatic effect. The benefits for the government are great, and the downsides are few; after all, the prosecutors' life and liberty are not at stake. This means, of course, that the government's power to tack on conspiracy charges can be abused, particularly with a weapon as potent and elastic as conspiracy. The Supreme Court has cautioned as follows:

We agree that indictments under the broad language of the general conspiracy statute must be scrutinized carefully as to each of the charged defendants because of the possibility, inherent in a criminal conspiracy charge, that its wide net may ensnare the innocent as well as the culpable.234

2. For a deeper dive into the Trump superseding indictment, I recommend the following: Marcy Wheeler, The Superseding Trump Indictment Is about Obstruction as Much as Immunity (EmptyWheel 8/28/24), here. The defraud conspiracy charge, Count One, is all about obstruction.

3. Some earlier blog entries on the atypical reading of the defraud conspiracy:

• Oral Argument in Supreme Court Case on Trump Immunity Discussing the Defraud / Klein Conspiracy (Federal Tax Crimes Blog 4/26/24), here.
• Update on Wartime Suspension of Limitations Act ("WSLA"), 18 USC 3287, and Tax Crimes (Federal Tax Crimes Blog 4/1/23; 4/2/23), here.
•  District Court Rejects Claim That Supreme Court Expansion of Defraud Conspiracy Is In Error (Federal Tax Crimes Blog 3/24/22; 3/27/22), here.
• District Court Sustains Tax Convictions but Grants Acquittal on Wire Fraud Convictions Because No Fraud (Federal Tax Crimes Blog 8/26/20), here.
• Supreme Court Reverses Bridgegate Convictions, Holding that Fraud Means Fraud; Implications for Defraud/Klein Conspiracy? (Federal Tax Crimes Blog 5/7/20), here.