Sealing an Indictment Pending Arrest in Tax Cases (7/3/14)

I just saw this interesting case involving a lawyer indicted for tax obstruction, Section 7212(a).  The case is United States v. McBride, 2014 U.S. Dist. LEXIS 89455 (D. MA 2014), here.  The count of the indictment, Section 7212(a), is here.  This specific tax count does not play an important role, other than background, in the following discussion of the sealing of the indictment pending the defendant's arrest.

Briefly, the facts are that the defendant is a disbarred attorney who, the Government alleged did some bad things, much of which were not necessarily tax crimes but were other crimes and skullduggery.  The defendant had known for a long time that he was under criminal investigation and his life otherwise seems to have been falling apart.  So, the Government requested that the indictment be sealed until he was arrested, in order to avoid giving him that information that might cause him to flee.  The Magistrate Judge sealed the indictment.  The defendant was arrested, and the indictment was unsealed.  The issue in the case is whether the Government had properly justified its request to seal the indictment.  The defendant complained about the sealing, and moved to dismiss the indictment.  The Court denied the motion to dismiss.  I offer by cut and paste the entire Discussion in the Memorandum and Order (I supply the bold-faced to draw readers attention to certain portions).

McBride argues that the government violated Rule 6(e)(4) when it moved to seal the indictment without asserting that he posed a  risk of flight or providing any other justification. Further, McBride claims that his arrest constituted an "unreasonable seizure" of his person in violation of the Fourth Amendment and Fed. R. Crim. P. 9 because the warrant was not "properly supported" by a risk of flight. According to McBride, the remedy for these violations is dismissal of the indictment. The government states it requested that the indictment be sealed to secure custody of the defendant. 

Rule 6(e)(4) states: "The magistrate judge to whom an indictment is returned may direct that the indictment be kept secret until the defendant is in custody or has been released pending trial." Fed. R. Crim. P. 6(e)(4). The First Circuit has held that "Rule 6(e) rests on the premise that criminal defendants not yet in custody may elude arrest upon learning of their indictment. . . . [T]he government need not articulate its reasons for requesting that an indictment be sealed, so long as its request is based on a ground set forth in Rule 6(e)." United States v. Balsam, 203 F.3d 72, 81 (1st Cir. 2000). Risk of flight is not the only basis for sealing an indictment. For example, sealing an indictment to protect a key prosecution witness qualifies as a "legitimate prosecutorial objective". Id. 

McBride argues that there is no evidence he posed a risk of flight, pointing out that his whereabouts are well known and he has attended proceedings regularly in Bankruptcy Court. He points out that he has no passport, and has extensive family ties here. The government does not concede that there was no risk of flight, noting: "The government was aware of information about McBride that reasonably raised concerns about a potential risk of flight, including the following: McBride had been disbarred in 2005 after decades of practice; he had filed for bankruptcy in 2009; he had recently lost both of his multi-million dollar homes in Marblehead and Edgartown; he had concealed from his bankruptcy trustee his efforts to fraudulently re-finance his Edgartown property; he had engaged in fraud, fabricated documents, forged signatures, and recorded fraudulent documents at two registries of deeds; and he had recently admitted to sufficient facts on multiple state charges involving identity fraud, credit card fraud and practicing law while disbarred."

Sealed Indictments - A Primer (7/11/12; revised 6/29/16)

I am in the process of updating my Federal Tax Crimes book.  I just added a discussion on sealed indictments and thought the readers of this blog might be interested in the subject (the following is a cut and paste from the draft of the revision):

The indictment is a public document.  FRCrP Rule 6(e)(4) permits the Magistrate Judge to seal an indictment “until the defendant is in custody or has been released pending trial.”  The following is from a Federal Judicial Center publication:

An indictment is sometimes filed under seal and kept sealed until the defendant appears. The indictment is kept sealed so as to not tip off the defendant. In some districts, indictments are initially sealed as a matter of course. Once the defendant has appeared, the indictment can be unsealed. If the defendant cooperates with the government’s prosecution of others, who may be defendants in the same case or defendants in cases with other case numbers, then the case may remain sealed because of cooperation. Sometimes an indictment remains sealed after the defendant appears because no one thought to unseal it. 

In a multi-defendant case, it is possible to seal the prosecution against one defendant while the prosecution against another defendant is not sealed. For this project, only cases sealed as to all defendants were counted as sealed cases. In a few of these, the court kept the case sealed until all defendants appeared, which presumably would require either the explicit or implicit consent of those defendants who did appear. 

Sometimes the government asks the court to dismiss a sealed indictment against a defendant who has not yet appeared. Perhaps the government has decided not to prosecute the defendant after all, or the government has decided to prosecute the defendant with a different indictment or in a different jurisdiction. In a few cases, the sealed indictment was transferred. It is not clear whether such indictments should remain sealed permanently. n1640