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.

Court Rejects Attempt to Attack Guilty Plea Over Claim that Prosecutor Threatened to Prosecute Wife (9/13/16)

It is not uncommon in situations where two related parties are implicated in a common potential crime for the federal prosecutor to offer and accept a plea by one of the parties with the inducement that indictment or prosecution of another will not occur or will be more lenient.  This sometimes happens in the context of husband and wife who filed a joint return and are both potentially culpable for some crime with respect to the return, such as tax evasion or tax perjury.  If the husband is more culpable, the prosecutor may offer to accept a plea from the husband and not charge or drop the charges for the wife.

Obviously, the power to indict and prosecute both spouses creates powerful incentives/coercion on the spouse or related party being offered the guilty plea.  Is that coercion fair?  Would it allow a defendant accepting the plea to avoid the plea agreement, perhaps at a time when the Government will be unable to prosecute the other spouse?

In Peters v. United States, 2016 U.S. Dist. LEXIS 106962 (ED TX 2016), here, adopted by the district court, 2016 U.S. Dist. LEXIS 106654 (ED TX 2016), the husband defendant accepted a plea to one count of tax evasion and one count of bankruptcy fraud.  After the district court accepted the plea and sentenced the defendant, he was incarcerated.  He then brought a federal habeas corpus petition under 18 USC § 2255, here.  The petitioner made several claims for habeas relief, but the only one I address here is that he was subject to under coercion because of the prosecutor's threat to indict his wife.  I quote from the magistrate's opinion which was affirmed by the district court on the grounds stated in the magistrate's opinion:

b. Peters' claim that the plea was coerced by the threat of prosecution of his wife lacks merit 

The Fifth Circuit has explained: 

[G]uilty pleas made in consideration of lenient treatment as against third parties pose a greater danger of coercion than purely bilateral plea bargaining." United States v. Nuckols, 569 (5th Cir.1979). Even so, there is no "intrinsic constitutional infirmity" in promising leniency to a third party in exchange for a guilty plea. Id. A prosecutor has discretion to "inform an accused that an implicated third person will be brought to book if he does not plead guilty." Id. The prosecutor has a duty of good faith in making such a representation, which duty is satisfied where he has probable cause to believe the third person has committed a crime. Id.; United States v. Diaz, 733 F.2d 371, 375 (5th Cir. 1984). 

McElhaney, 469 F.3d at 385 [McElhaney v. United States, 469 F.3d 382 (5th Cir. 2006)]. Thus, so long as the Government has probable cause to bring charges against a defendant's relative, the "defendant's plea 'would not be involuntary by reason of a desire to extricate his relatives from such a possible good faith prosecution.'" Id. (quoting Diaz, 733 F.2d at 375). 

Peters does not allege that the Government lacked probable cause to bring charges against his wife in the underlying criminal case or otherwise acted in bad faith during the plea bargaining process. Rather, he asserts that defense counsel threatened that his wife would be subject to indictment should Peters proceed to trial. See Brief in Support of Motion, Exhibit B. However, it is evident from the record that defense counsel reasonably concluded the Government had probable cause to bring an indictment against Peters' wife, since she was a signatory on the tax and bankruptcy filings at issue in the case. See Arrambide Affidavit at 1-6. Under the circumstances, the Court cannot find fault with counsel's advice regarding the potential exposure of his clients' spouse. Moreover, Peters' decision to enter a guilty plea in order to prevent such a good faith prosecution cannot be deemed involuntary.

This is a pretty fair statement of the law.  The issue of undue coercion is whether the prosecutor made an unreasonable threat to prosecute the third party to induce the plea.  Reasonableness is determined by whether the prosecutor had probable cause to assert the potential prosecution of the third party.  If so, then most courts would not entertain the attack on the plea.

In United States v. Marquez, 909 F.2d 738 (2d Cir. 1990), although an older case, the Second Circuit provides a good discussion of the then state of the law, which appears to be also the current state of the law.  In Marquez, the defendant sought to withdraw his guilty plea.  He claimed that the prosecutor had improperly threatened less leniency against his wife if he did not accept the offered plea.  (Or, I could have said that the prosecutor offered more leniency to the wife if he accepted the offered plea.)  He accepted the plea and sought to withdraw the plea.  The district court denied the request.  The defendant appealed on several grounds.  The Court of Appeals affirmed, reasoning

Fifth Circuit Rejects Attempt on Direct Appeal to Withdraw Guilty Plea in False Claims Conspiracy Case (1/24/15)

In United States v. Harrison, ___ F.3d ___, 2015 U.S. App. LEXIS 966 (5th Cir. 2015), here, the court provided the following introduction which sets up what I want to discuss in this blog (footnotes omitted):

A grand jury charged Harrison in a multi-count, multi-defendantn1 indictment with conspiracy to defraud the Internal Revenue Service ("IRS") by filing false claims and with two counts of filing a false claim. Three days before his trial was set to begin, Harrison signed a plea agreement in which he agreed to plead guilty to the conspiracy charge. In exchange, the government agreed to dismiss the remaining charges. Pursuant to Federal Rule of Criminal Procedure 11(c)(1)(C), the parties agreed to a sentence of eighty-four months, which was twenty-four months below the statutory minimum as calculated based on Harrison's offense level and criminal history category. Harrison also agreed to waive his right to appeal his conviction and sentence, but he expressly reserved the right to challenge the voluntariness of his guilty plea or waiver of appeal and the right to bring a claim of ineffective assistance of counsel.

The conspiracy count was under 18 USC 286, here, which provides a 10 year maximum sentence; as stated, the sentence shall be "not more than ten years.".  By contrast, the general conspiracy charge under 18 USC 371, here, employed in many tax cases has a 5 year maximum  sentence.  The defendant pled to the conspiracy count, with the Government dismissing the remaining courts.  The court states that the agreed upon sentence was "below the statutory minimum."  There is no statutory minimum.  The court apparently refers to the lower end of the Guidelines range calculated for the defendant.  The purpose of the FRCrP 11(c)(1)(C), here, was to lock in that lower than Guidelines sentence.

As usual with such guilty pleas, the defendant agreed to the key facts, including his participation in a conspiracy to file false claims.  After a proper colloquy and presentation of agreed facts supporting the plea, the Court accepted the plea and sentenced Harrison to the agreed eighty-four months.  After the plea, but before the PSR was prepared, Harrison moved to withdraw his plea, claiming that it was not voluntary.  Harrison's attorneys moved to withdraw based on irreconcilable differences.

The district court denied the motion to withdraw the plea.  Harrison moved to reconsider.  The district court denied that motion.  At sentencing, Harrison again asked to withdraw the plea. He requested an evidentiary hearing (footnotes omitted):

so that he could present evidence supporting his actual innocence, "to include but not limited to codefendant statements affirming that [he] did not conspire nor participate in the [scheme]." He claimed that he pled guilty under duress and coercion because the prosecutor would agree to favorable eighty-four-month sentences for each defendant only if "all siblings [pled] guilty," and he felt pressured to accept the plea because his brothers otherwise faced up to forty years of imprisonment. Finally, he argued that he received ineffective assistance of counsel when counsel advised him to enter the plea agreement despite his assertion of innocence because counsel erroneously suggested that he would be prejudiced by a prior sexual assault conviction and because counsel did not investigate or discover exonerating evidence, "for example, the true identi[ty] of Chris Smith ."

The district court again denied the request to withdraw and denied the request for a hearing.  The district court was obviously peeved that Harrison would admit guilt in the plea colloquy and the agreed facts supporting the plea and now reverse, in effect saying that he lied in making the original guilty plea. (That is a phenomenon present in all guilty pleas with a proper colloquy.)  As to the argument of ineffective assistance of counsel, the Court declined to address the issue (it is normally handled in a post-sentencing 28 USC 2255, here, proceeding), but did give the following signal:

 . . [Y]ou will be entitled to raise an ineffective assistance of counsel claim. I do not know what happened here. I know [your attorney]. He comes into this court regularly. He is one of the best lawyers in town, and you just have to understand and face that.

The Fifth Circuit first addressed the issue of whether the appeal waiver in the plea precluded consideration of Harrison's appeal of the denial of his right to withdraw the guilty plea and hold an evidentiary hearing.  Applying contract principles, the Court said that the appeal waiver permitted the appeal.