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.

District Court Holds that Custodial FBI Investigation on Arrest for Nontax Crime Producing Tax Crime Information Not in Charges Originally Made Did Not Violate Rights (10/31/21)

In United States v. Lieber, No. 1:20-CR-10111-RWZ, 2021 U.S. Dist. LEXIS 197575 (D. Mass. Oct. 13, 2021), CL opinion here and docket entries here, the Court denied the defendant’s motion to suppress statements made during a custodial interview by FBI agents after his arrest on the initial indictment charging nontax crimes.  I previously wrote on the superseding indictment Superseding Indictment for Former Harvard Chair on Tax and FBAR Crimes (7/29/20), here.

The opinion is very short and very well written.  I recommend readers of this blog read the whole thing.

In summary, the initial indictment charged Lieber with two counts of making false statements related to his federal funding for research at Harvard University.  Two FBI Agents arrested Lieber on July 28, 2020 pursuant to that initial indictment and took him to the Harvard University Police Department Headquarters where they questioned him for three hours.  The agents recorded the interview.  Before the questioning, they read Lieber the full Miranda rights for custodial interviews, which included the right to suspend the interview and consult with counsel.  In response to the Miranda warning about right to counsel, Lieber made equivocal statements about his need for counsel but did not expressly state that he wanted to consult with counsel before proceeding.  The Agents continued the interview and, in the course of the interview developed information that led to a superseding indictment which included two tax counts for tax perjury (§ 7206(1)) and two counts for failure to file an FBAR.

Lieber moved to suppress the fruits of the interview resulting in those additional counts in the superseding indictment.

As interpreted by the court, in the interview, Lieber did not make an unequivocal request for counsel.  Hence, the Court held that there was no Miranda problem with continuing the interview.  The Court also held that the circumstances of the interview were not coercive (enough) so as to prevent Lieber’s voluntariness in the interview.

These cases are fact-specific depending upon unique facts and nuances.  The Court gives an excellent discussion and probably as succinct as reasonable to capture the nuance.  I think therefore that I would disserve readers by attempting to offer more discussion than the summary I provide above.  I highly recommend reading the opinion.

 JAT Comments:

D.C. Circuit Rejects Claim that Admissions were Coerced (2/12/2020)

In United States v. Cooper, ___ F.3d ___, 2020 U.S. App. LEXIS 4153 (D.C. Cir. 2020), here, two defendants, along with another (described as the hub in the wheel in this conspiracy), orchestrated a tax refund scheme and were convicted of theft of public money and conspiracy to defraud the United States. See 18 U.S.C. §§ 641, 371.  One was also convicted of aggravated identity theft, 18 U.S.C. § 1028A.  On appeal, they urged: (i) one asserted a Miranda failure from an interview at the time of executing a search warrant; (ii) that the court erred in allowing IRS agent summary witness testimony and (iii) miscellaneous other arguments that the court deemed insubstantial warranting only summary discussion.

I don’t think there is anything exceptional in the case.  But the first issue (the Miranda issue) is a reminder because it does come up often.

First, the particular fraud involved was tax fraud via erroneous refunds.  The Court describes the fraud as follows:

Several individuals in the District of Columbia acted together to steal millions of dollars from the Federal Treasury. Their method of operation was this. First beg, steal, purchase or borrow other people’s identities including, most importantly, their Social Security numbers. Then file false income tax returns seeking refunds in their names. Keep the refund requests relatively small. List on the tax returns the addresses, not of the purported filers, but of one or another co-conspirator. Then, when the refund checks from the Treasury arrive, compromise bank tellers, negotiate the checks, and deposit the proceeds in the conspirators’ personal accounts. This multi-year conspiracy netted a total of nearly $5 million in tax refunds from the Treasury.

Second, Notwithstanding the tax focus of the fraud, the investigation was started by a Postal Inspector “after detecting what appeared to be fraudulent tax returns being sent through the mail.”

Order Denying Suppression -- Grand Jury Target or Subject and Miranda Issues (10/22/16)

In United  States v. Cason, 2016 U.S. Dist. LEXIS 142434 (D WV 2016), here, the Court denied Cason's motion to suppress evidence of Cason's statements in an interview of Cason by IRS agents serving a search warrant.  Cason denied that he was testified that he was a subject of the grand jury investigation and that he was given the appropriate Miranda warnings.  The Agents testified differently, and their contemporaneous memorandum of the interview to that effect was entered.  The Magistrate conducting the hearing on the motion had made the key findings:

• After knocking on Cason's front door, the agents waited on his porch for three to four minutes while Cason's daughters left for school, hardly indicating custody or restriction;
• The agents tone did not change once they entered the home;
• The agents twice informed Cason that he was the subject of an investigation, that he was free to consult with an attorney, and that he was free to end the interview at any time n4;

   n4 Agent Gandee recounted this fact in his memorandum of interview, which he gave Cason the opportunity to review a few weeks later. The memorandum clearly indicated that Cason had been "informed he [was] the subject of a criminal investigation, that he had the right to legal counsel, and that he did not have to answer any of [their] questions." After reviewing the memorandum together with his legal counsel, Cason noted that there were no "major" inaccuracies.
   In his objections to the R&R, Cason argues that he "should have testified as to the nature and completeness of his review of the Memorandum, as should have [his attorney]," and that "[n]onetheless, [his] brief review of the Memorandum weeks later does not change any of the facts recited above." (Dkt. No. 39 at 9). Yet, Cason fails to explain how a memorandum wrongfully indicating that he had been informed of such highly pertinent facts and rights, of which both he and his attorney were fully aware, somehow contained no "major" inaccuracies.

• The agents did not restrict Cason's freedom of movement;
• When the agents requested that Cason ride with them to his office, he willingly agreed;
• While at his office, Cason was free to take phone calls and to leave the room, which he did multiple times, indicating that he freely ended his conversation with the agents at multiple points;
• While at his office, Cason was free to consult with counsel, and to end the interview, which he ultimately did; and
• Nothing in the record indicated that Cason was threatened or coerced.

In the opinion linked above, the district court affirmed those findings which controlled the disposition of the motion to suppress.

I write to address two issues -- the grand jury "subject" issue and the Miranda warnings issue.

Grand Jury Subject Issue

District Court Rejects Suppression for Interview of Target of Grand Jury Investigation Without Notifying His Counsel (10/4/16)

In United States v. Sabean, 2016 U.S. Dist. LEXIS 136658 (D ME 2016), here, the district court declined to suppress made by the target of a grand jury investigation to IRS agents when the agents knew that he was represented by an attorney on tax matters without going through the the attorney.  The facts are unusual, so I will just summarize the key facts.

First, the indictment, here, that was ultimately handed down in October 2015 charged tax evasion (Counts 1-5) and Unlawful Distribution of Controlled Substances (Counts 6-57).  I don't know what inferences might be drawn from the tax charged appearing first in the indictment.

Now, turning to the key facts.

The grand jury investigation in which Dr. Sabean was targeted had commenced prior to January 15, 2014.  The scope of the grand jury investigation as of that date is not stated.  IRS agents had been assigned to assist the grand jury.  From the tax charges in the ultimate indictment and the presence of IRS agents, it might be inferred that tax crimes were among those being considered by the grand jury.  But, that is an inference and not a compelled inference because IRS agents are used in some nontax grand jury investigations.  At any rate, whether the scope of the grand jury investigation included tax crimes at the key times here relevant does not appear to be important.

The interview in question was conducted on January 29, 2014 by IRS agents assigned to assist the grand jury.  This is the key interview in issue.

Before that interview, on January 15, 2014, the agents had appeared at the residence of owners of a bookkeeping company used by Dr. Sabean,  to serve a grand jury subpoena.  They advised the owners of the company that "they were conducting an investigation of Dr. Sabean and had questions for the Kuhls [the owners of the bookkeeping service] in this regard." They then interviewed the Kuhls for about 2 hours.  No indication came up in the interview that Dr. Sabean was represented on his tax matters.  They left with some boxes of documents and requested that the Kuhls not advise Dr. Sabean of the visit and grand jury subpoena.

The IRS agents determined on preliminary review of the documents that some of the documents might be subject to privilege as to Dr. Sabean with an attorney named Sheehan, a tax attorney, who had engaged a private investigator on Dr. Sabean's tax matters.  As typical, an AUSA taint team was created to review the documents potentially subject to privilege.

On January 21, 2014, the IRS agents conducted another interview of the Kuhls and obtained additional documents  responsive to the subpoena.  They discussed the attorney and the hiring of the investigator.  In obtaining the additional documents, the IRS agents asked the Kuhls to segregate out items potentially privileged so that they could then be submitted to the taint team.

On January 29, 2014, the IRS agents went to Dr. Sabean's offices to interview him.  The opinion suggests, but does not state, that Dr. Sabean was not aware of the investigation until the agents showed up.  The agents did not advise Dr. Sabean of any rights he might have.  Readers of this blog know that IRS agents conducting CI administrative investigations are required by the IRM to give the noncustodial statement of rights.  See the IRM provisions quoted and linked at the bottom of this blog entry.  The reason was that they were not conducting a CI administrative investigation.  The AUSA had advised them that they were not subject to that requirement because they were conducting the interview pursuant to a grand jury investigation.  (See IRM provision cited and quoted at the end of this blog entry.)

The attorney then advised the agents that further communications should be through him rather than through Dr. Sabean.

In ensuing criminal case then brought by indictment in October 2015, Dr. Sabean moved to suppress any statements he had made in the January 29 interview.  The issue was whether the agents' interview of Dr. Sabean on January 29, 2014 had violated the Maine Rules of Professional Conduct, made potentially applicable by the Citizens Protection Act, 28 U.S.C. § 530B(a) (referred to as the “McDade Amendment”).  The applicable Maine Rule 4.2 was:

Priest Pleads Guilty to Tax Evasion After Losing on Suppression Motion re Miranda (8/9/16)

DOJ Tax has this press release, here, on a Catholic Priest who has pled to tax evasion on income he stole from parishoners.  The indictment is here.  This is cut and paste from the press release:

Father Hien Minh Nguyen, 56, admitted that over a period of four years, he stole money his parishioners donated to the Diocese and willfully evaded paying income taxes on the money he misappropriated each year from 2008 through 2011.  He admitted that he deposited this money into his personal bank account, did not disclose this income to his return preparer, did not keep records of the donations he stole, and filed false income tax returns which did not report this money.  

Father Nguyen also pleaded not guilty to bank fraud charges.  Those charges are still pending.  

“Father Nguyen stole money from his parishioners and filed false returns with the IRS to evade his income tax obligations,” said Principal Deputy Assistant Attorney General Ciraolo.  “The department remains committed to holding all criminal tax offenders accountable for their illegal conduct, regardless of their profession.  No one is above the law.” 

Sentencing on the tax evasion convictions has not been scheduled.  Father Nguyen faces a statutory maximum sentence of five years in prison and monetary penalties for each tax evasion conviction. Father Nguyen’s next scheduled appearance is a status conference on the bank fraud charges currently scheduled for Aug. 23.  An indictment is merely an allegation and a defendant is presumed innocent until and unless proven guilty in court.  Father Nguyen pleaded guilty to the tax evasion charges.  He has not pleaded guilty to bank fraud charges and remains presumed innocent of those charges. 

This just seems a different iteration of garden variety fraud coupled with tax evasion.

In an earlier decision, the district court denied a motion to suppress statements he made to "IRS agents on the basis that they were: (1) involuntary; and (2) the product of an un-Mirandized custodial interrogation."  United States v. Nguyen, Case No. 15-cr-00203-BLF-1 (N.D. Cal. May 05, 2016), here.  Such claims by taxpayers who make admissions or false statements to IRS agents are often made and rarely successful.  Although the court ultimately rejected the claim, the pattern is unusual.  The agents surprised the taxpayer with a request to interview him which he allowed.  At the start, the IRS noncustodial Miranda warning was given.  The taxpayer then started giving inconsistent answers.  The agents called the inconsistencies to his attention.  He ask what was the worst that could happen to him.  They declined to answer the question.  He then asked for a break, and the agents left the room.  A short while later, he invited the agents back into the room.  The agents then read him the noncustodial Miranda warning.  The agents then continued the questioning and he continued to participate.  He lied in some of his answers.  Then he said he had stolen the money.  The district court held that he participated voluntarily in the noncustodial interview and had not been tricked, deceived or coerced.

In my experience, in cases where the agents suspect a possible crime within the scope of CI's investigative authority, they will always start with the noncustodial Miranda warning.  Indeed, IRM 9.4.5.11.3.1.1  (02-01-2005), Subject of Investigation, here, requires that, at the start of the initial interview, the agents first identify themselves as IRS CI agents whose job includes investigation of tax crimes.  In the next paragraph, with no specific time statement, the agents are required to give the noncustodial warnings.  As stated, there is no express temporal requirement, but the implication and, in my experience, the practice, has been to give the warning.  The Court addresses the taxpayer's argument on this as follows:

iv. The IRS Form 5661 Non-Custody Statement Of Rights 

Important Second Circuit Decision on Custody Requirement for Miranda Warnings (7/20/16)

The Supreme Court held long ago that, before statements of persons questioned while in custody can be used at a criminal trial where the person questioned is a defendant, the person must be given warnings that have come to be called Miranda warnings.   Miranda v. Arizona, 384 U.S. 436, 444 (1966).  These warnings are statements of the person's right to remain counsel and request counsel before the interview continues.  The key issue is what is "custody," and that has been the principal battle ground ever since.  (A related issue unique to the administrative agency, particularly tax, arises where agencies conduct both civil and criminal investigations and an agent conducting a civil investigation may really be conducting a de facto criminal investigation in which he misleads the target of the investigation as to the criminal nature of the investigation.  For the Federal Tax Crimes blogs discussing some aspect of this issue, see here.)

The Second Circuit recently addressed the custody issue in a nontax investigation.  United States v. Faux, ___ F.3d ___, 2016 U.S. App. LEXIS 12577 (2d Cir. July 8, 2016), here, reversing United States v. Faux, 94 F. Supp. 3d 258 (D CN 2015), here.  The Second Circuit panel's decision is important potentially applicable in some criminal tax investigations.

The decision commences with a good overall summary:

The United States appeals from an order suppressing statements made by defendant Danielle Faux during a two‐hour interview that was conducted in her home while a search warrant was being executed.  The underlying allegation is that Faux fraudulently submitted bills for physical therapy sessions (which would be insurable) that were in fact (uninsured) sessions with personal trainers. The United States District Court for the District of Connecticut (Underhill, J.) ruled that the circumstances of the interview amounted to a custodial interrogation and that the statements must be suppressed because Miranda warnings were not given.  It can hardly be denied that the conditions of the interview exerted coercive pressure on Faux: armed law enforcement personnel entered her home at dawn, her vacation plans were abruptly canceled, and she was accompanied by an agent when she moved about her home; however, the circumstances did not rise to the level of a “custodial interrogation,” which is defined narrowly in our case law as circumstances akin to formal arrest.  The Government stepped right up to the limits of constitutionally permissible conduct and, based on the facts accepted by the district court, just managed to toe the line.  Accordingly, we vacate the order of the district court and remand for further proceedings not inconsistent with this opinion.

Also, similarly helpful as a summary is the conclusion (pp. 20-21 of the slip opinion:

III 

Under our precedents, the circumstances of Faux’s interrogation militate against a finding of custody.  Faux was questioned in the familiar surroundings of her home.  See FNU LNU, 653 F.3d at 153.  She was seated at her own dining room table.  See Beckwith v. United States, 425 U.S. 341, 342 (1976).  She was not handcuffed during the interrogation and was not arrested at its conclusion.  See Newton, 369 F.3d at 663.  The agents did not display their weapons or otherwise threaten or use any physical force.  See Badmus, 325 F.3d at 136. n8  Faux claims the agents “held her arm” as they escorted her to her dining room for the interview; but the agents denied this, the district court made no finding one way or the other, and the gesture is not described as being forceful.  In short, there is no evidence that physical force was used, or threatened.
   n8  This distinguishes our case from the “police‐dominated environment” that led to a custody finding by the Ninth Circuit in Craighead.  There, the agents unholstered their weapons in the presence of the defendant several times.  539 F.3d at 1084‐88.  The interrogation took place in a “back storage room” where the door was closed behind the defendant and one of the armed officers stood blocking the door, silently.  Id.  There is no indication in this case that any of the agents physically imposed themselves to prevent Faux from leaving the dining room; in fact, she was permitted to move throughout the house, albeit accompanied by an agent. 

On this record, and given our precedents, it must be concluded that Faux was not in custody.  True, the two‐hour interview was conducted while officers swarmed about her home.  But she was told 20 minutes into the interview that she was not under arrest; she was never told that she was not free to leave; she did not seek to end the encounter, or to leave the house, or to join her husband; the tone of the questioning was largely conversational; there is no indication that the agents raised their voices, showed firearms, or made threats.  Her movements were monitored but not restricted, certainly not to the degree of a person under formal arrest.  She was thus never “completely at the mercy of” the agents in her home.   

Faux’s statements should not have been suppressed, because no Miranda warnings were necessary.

Judge Suppresses Statements During Coercive Interview in Home by Agents While Execution of Search Warrant in Progress (3/28/15)

In United State v. Faux, 2015 U.S. Dist. LEXIS 37051 (D Ct. 2015), here, the defendant was investigated for health care fraud based significantly on a confidential witness.  In the investigation, based on the reported claims of the confidential witness and other matters, the agents obtained a search warrant to search the defendant's home.

The agents executing the search warrant showed up early in the morning, catching the defendant and her husband as they were about to leave for a vacation to Mexico with their son and his family.  "Approximately ten to fifteen agents from three agencies -- the FBI, HHS-OIG and the Criminal Investigations Division of the Internal Revenue Service ('IRS-CID')" executed the search warrant, apparently all having guns which, apparently also, were not drawn during the execution of the search warrant.  The defendant claimed that the agents told her that she was not going anywhere; the agents denied the claim.  The defendant did, in any event, cancel her plans, and the agents heard her do so without correcting her as to whether cancelling the plans was necessary.

Two of the agents -- an FBI agent and an HHS-OIG agent -- questioned Faux in her living room during the execution of the search warrant.  The interview lasted about 2 hours. They did not give her Miranda or even modified Miranda warnings.

The defendant was then indicted for "health care fraud, in violation of 18 U.S.C. § 1347, obstruction of a federal audit, in violation of 18 U.S.C. § 1516, filing a false statement on a tax return, in violation of 26 U.S.C. § 7206, and aiding and abetting under 18 U.S.C. § 2."  The defendant moved to suppress the statements made in the interview.  In deciding the issue, the court make the inquiry as to whether the situation was sufficiently coercive that the Miranda warnings -- which were not given -- were required to be given.  Under the circumstances the court found this particular interview to be in a coercive setting.  While normally, an interview in the home would not be a type of coercive setting such as an arrest and detention, "[U]nder certain circumstances, however, the home may be transformed into a custodial setting."  The court then made the determination that it was:

Although there are factors pointing in both directions, after considering the totality of the circumstances, I find Faux was in custody during the interrogation. Several mitigating factors weigh against a finding of custody in this case. Faux was questioned in the "familiar surroundings" of her home, was not handcuffed during the interrogation, and was not arrested at its conclusion. McPhillips [FBI] and Fontes [HHS-OIG] did not display their weapons or otherwise threaten physical force. Faux was never told that she was not free to leave, and there is no indication that she asked to terminate the interrogation, to leave the residence, or to be questioned in the same room as her husband. And, the tone of the questioning was largely conversational; there is no indication that McPhillips or Fontes raised their voices or made threatening statements in order to elicit responses to their questions. See, e.g., Falso, 293 F. App'x at 839; Berschansky, 958 F. Supp. 2d at 382-83; Groezinger, 625 F. Supp. 2d at 158. 

Yet, there are numerous aggravating factors that, in combination, distinguish this case from others where courts in this Circuit have held that an interrogation was not custodial. First, Faux was interrogated while about a dozen agents from three federal agencies executed a search warrant at her home. Faux did not invite a couple of officers into her home for a friendly chat; she was compelled to admit the officers in numbers they chose. Moreover, Faux's affidavit indicates that she knew or believed that the agents were armed. This is a documents case, not one involving weapons, drugs or other contraband, or a dangerous suspect. A reasonable person would not expect that so many armed officers would be needed to execute a search. The presence of a dozen armed officers would have been intimidating and would have communicated a show of force to a reasonable person, even if weapons were not drawn. Cf. Newton, 369 F.3d at 675 (presence of six officers would not "by itself, have led a reasonable person in [defendant's] shoes to conclude that he was in custody," because "[a]s a parolee, [defendant] was accustomed to parole officers coming to his home to ask questions," and defendant recognized some of the officers present during search).

Ninth Circuit Affirms False Statement Conviction Without Instruction that Willfulness Requires Knowledge of Illegality of the False Statement (1/31/15)

I previously reported on the DOJ's adoption of a stricter interpretation of willfulness for conviction of false statement under 18 USC § 1001, here.  See False Statements Crime Element of "Knowingly and Willfully" Requires Proving Knowledge that Making False Statement Is Illegal (Federal Tax Crimes Blog 6/26/14), here.  The new interpretation of willfulness for the crime requires that the defendant know that the making the false statement was illegal. Many cases before that new interpretation had required merely that the defendant know that he or she made a false statement.  Knowledge of illegality was not required.  In United States v. Ajoku, 584 Fed.Appx. 824 (9th Cir. 2014), the Department of Justice confessed error in the Supreme Court because the stricter interpretation of willfulness in an 18 USC § 1035, here, prosecution had not been used.  At the same time, in its papers, DOJ contemporaneously indicated that the willfulness element of § 1001 should be interpreted the same as for § 1035.

In United States v. Mazzeo, 2015 U.S. App. LEXIS 1040 (9th Cir. 2015) (unpublished), here, the Court was presented with the issue of whether a guilty verdict before the adoption of the new interpretation based on an instruction omitting the stricter willfulness interpretation was error and, if so, reversible error.  That issue alone made Mazzeo worthy of comment here.  Mazzeo also involved another issue that I think is worthy of discussion -- whether it was error for the district court to exclude the IRS agents' notes of the conversation giving rise to the false statement conviction.

Before addressing the issues separate, I think it will be helpful to quote the full opinion because it is short and the issues are certainly related.  I omit the caption:

MEMORANDUM n*
  n* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. 

Defendant-Appellant Tara Mazzeo appeals her conviction on two counts of making false statements to a government official in violation of 18 U.S.C. § 1001, for which she was sentenced to five years of probation without conditions of confinement. Mazzeo contends that the district judge committed reversible error in excluding the government agent's handwritten notes from evidence and that there was insufficient evidence to support the jury's verdict. Mazzeo additionally argues that the district court plainly erred in failing to instruct the jury that the element of willfulness for a § 1001 crime requires knowledge of unlawfulness. We have jurisdiction under 28 U.S.C. § 1291. We ordered supplemental briefing regarding Mazzeo's challenge to the district court's jury instruction related to willfulness and affirm as to all issues raised in the case. 

The district court's exclusion of evidence during trial is reviewed for abuse of discretion. United States v. Evans, 728 F.3d 953, 959 (9th Cir. 2013). Under this deferential standard, we consider whether the district court's evidentiary decision was based on "consideration of the relevant factors" and whether there was a "clear error of judgment." United States v. Soulard, 730 F.2d 1292, 1296 (9th Cir. 1984). The district judge did not abuse his discretion in determining that the notes had little, if any, probative value on the basis of Mazzeo's proffers at trial. Even if in error, the exclusion neither rose to the level of a deprivation of Mazzeo's constitutional rights, cf. United States v. Pineda-Doval, 614 F.3d 1019, 1032-33 (9th Cir. 2010), nor undermined the weighty evidence offered against Mazzeo so as to more probably than not affect the jury's verdict, see United States v. Gwaltney, 790 F.2d 1378, 1384-85 (9th Cir. 1986). 

Mazzeo's argument, presented for the first time upon appeal, that the excluded notes were inconsistent with evidence produced at trial is reviewed for plain error. See Hudspeth v. Commissioner, 914 F.2d 1207, 1215 (9th Cir. 1990). This argument fails because the distinctions that Mazzeo points to are ones without a difference. Considering the ample evidence supporting the jury's verdict and the jury's opportunity to fully consider the defense's theory that Mazzeo understood the questions differently from the agents even absent the notes, we cannot say that any possible error seriously affected the fairness and integrity of the proceedings so as to warrant reversal. See United States v. Romero-Avila, 210 F.3d 1017, 1022-23 (9th Cir. 2000) (declining to reverse for plain error where prosecutor presented independent evidence of defendant's guilt). 

Mazzeo's challenge to the sufficiency of the evidence, preserved by motion for acquittal, is reviewed de novo. United States v. Carranza, 289 F.3d 634, 641 (9th Cir. 2002). Mazzeo argues that her conviction for false statements cannot be sustained where the interview on which it was based was not recorded and where the government failed to otherwise prove the precise language of the questions to which the jury found her answers false. These arguments fail on several grounds. 

This is not an instance where a single, ambiguous question could have lent itself to separate interpretations, with respect to one of which the defendant's  answer was literally true. Cf. United States v. Cook, 489 F.2d 286, 286 (9th Cir. 1973). Rather, the jury was presented with starkly contrasting versions of questions asked and answers given by Mazzeo. We decline to invade the jury's exclusive province to evaluate the credibility of witnesses in order to resolve such evidentiary conflicts. See United States v. Young, 573 F.2d 1137, 1139 (9th Cir. 1978) ("[I]t is the jury's exclusive function to weigh the credibility of witnesses, resolve evidentiary conflicts and draw reasonable inferences from proven facts."). 

We also decline to adopt a new, bright-line rule barring § 1001 prosecutions absent a recording of the incriminating interview. In false statements cases, the full context in which the statements were uttered is to be evaluated in determining the sufficiency of the evidence. See United States v. Sainz, 772 F.2d 559, 562 (9th Cir. 1985). Drawing all reasonable inferences in favor of the government, see United States v. Corona-Verbera, 509 F.3d 1105, 1117 (9th Cir. 2007), we conclude that a "rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Mincoff, 574 F.3d 1186, 1192 (9th Cir. 2009) (quoting United States v. Dearing, 504 F.3d 897, 900 (9th Cir. 2007)). 

Mazzeo's challenge to the jury instruction on willfulness is reviewed for plain error, as there was no objection at trial. United States v. Garrido, 713 F.3d 985, 994 (9th Cir. 2013). "A plain error that affects substantial rights may be considered even though it was not brought to the court's attention." Fed.R.Crim.P. 52(b). Nonetheless, we cannot correct an error pursuant to Rule 52(b) "unless the error is clear under current law." United States v. Olano, 507 U.S. 725, 734, 113 S. Ct. 1770, 123 L. Ed. 2d 508 (1993). That is, for an error to be "plain," it must be "contrary to the law at the time of appeal." Johnson v. United States, 520 U.S. 461, 468, 117 S. Ct. 1544, 137 L. Ed. 2d 718 (1997). Mazzeo argues that the district court's error in failing to instruct the jury that knowledge of unlawfulness is required for a § 1001 crime is plain in light of the government's concession of error and our unpublished decision in United States v. Ajoku, 584 Fed.Appx. 824 (9th Cir. 2014). We disagree. 

As Ajoku addressed a conviction under 18 U.S.C. § 1035, it did not disturb the longstanding precedent in this circuit that, under 18 U.S.C. § 1001, "willfully" means only "deliberately and with knowledge." United States v. Tatoyan, 474 F.3d 1174, 1182 (9th Cir. 2007) (citing Browder v. United States, 312 U.S. 335, 341, 61 S. Ct. 599, 85 L. Ed. 862 (1941)); United States v. Heuer, 4 F.3d 723, 732 (9th Cir. 1993). Mazzeo points to no intervening authority displacing this holding. Whether or not the "willfulness" element for a § 1001 crime should be altered is a question for another day. As the district court's error, if any, is not obvious under current law, Mazzeo's conviction must stand. 

AFFIRMED.  

Silence in NonCustodial Interviews and the Fifth Amendment (3/28/14)

I just read the Seventh Circuit's  opinion in United States v. Phillips, ___ F.3d ___, 2014 U.S. App. 4898 (7th Cir. 2014), here, and a recent Champion article, Neal Davis and Dick DeGuerin, Silence is No Longer Golden: How Lawyers Must Now Advise Suspects in Light of Salinas v. Texas, 38 Champion 16 (2014) [I do not have a link to the article].  I thought it might be worth revisiting an issue I had discussed before in two blogs: Silence in Response to Questions Without Miranda Warning in NonCustodial Setting May Be Evidence of Guilt (Federal Tax Crimes Blog 6/18/13), here, discussing Salinas v. Texas, 570 U.S.    , 133 S. Ct. 2174 (2013), here, and Invocation of Fifth Amendment in Noncustodial Setting May Not Be Used In Prosecution's Case in Chief (Federal Tax Crimes Blog 9/5/13), here, discussing United States v. Okatan, 728 F.3d 111 (2d Cir. 2013), here, which in turn discusses a facet of Salinas.  A brief summary of the law as discussed in those cases and the blogs is that the prosecution may comment at trial upon a noncustodial witness' silence even if the witness was not "Mirandized. " (Readers will recall that Miranda warnings are required only in custodial or equivalent settings, but the IRS in criminal investigations gives modified Miranda warnings in noncustodial settings.)  Of course, such a comment would be improper if the silence were in a context that the witness invoked his or her Fifth Amendment (either expressly or inferentially in context, such as by asking to consult with an attorney).  Salinas held that the prosecutor could.  Okatan held that, if the witness had asked to consult with an attorney, he had effectively invoked his Fifth Amendment privilege and the prosecutor could not comment.

In Phillips, the prosecution elicited at trial from an IRS CI agent that that the testifying CI agent testified that, during the investigation, he had sent two other CI agents to serve a summons and they had served it on defendant.  The cryptic opinion does not state that those serving CI agents attempted to interview her when they served the summons.  Nevertheless, the defendant argued for the first time on appeal that the implication of the testimony as elicited at trial was that they had attempted to interview her and she had not cooperated.  There is no indication that, in fact, the CI agents had attempted to interview her, that they had or had not given Miranda or modified Miranda warnings or that she had refused to be interviewed (stayed silent).  The defendant was apparently arguing that the testimony as elicited inferred at least that they had attempted to interview her and that she had not cooperated.

As an issue raised for the first time on appeal, the Court applied the plain error standard of review.  The Court then rejected the argument cryptically:

Mrs. Phillips claims that the government's questioning of Agent Howard commented on her silence in violation of her Fifth Amendment right against self-incrimination. She argues that Agent Howard spoke of sending agents to "attempt" to interview her, which Mrs. Phillips claims subtly implied that she had refused to speak. She did not object to Howard's testimony or to the prosecutor's statement at closing, so we review only for plain error. United States v. Della Rose, 403 F.3d 891, 906 (7th Cir. 2005). Of course, a defendant has "a constitutional right to say nothing at all about the allegations." United States ex rel. Savory v. Lane, 832 F.2d 1011, 1017 (7th Cir. 1987).  But the government violated her right only if it "manifestly intended to refer to [her] silence, or ... [if] the remark was of such a character that the jury would naturally and necessarily take it to be a comment on [her] silence." United States v. Andreas, 216 F.3d 645, 674 (7th Cir. 2000) (citation and internal quotation mark omitted). 

In light of what happened at Mrs. Phillips' trial, her argument is unconvincing. The government's explanation for Agent Howard's testimony—to establish that the couple started withdrawing cash as soon as they became aware of the IRS investigation—is logical and is reflected in the government's closing argument. The government intended to, and did, point out suspicious conduct and timing, rather than comment on Mrs. Phillips' invocation of her right against self-incrimination. Nor would a jury be likely to view Agent Howard's testimony as commenting on her silence. Indeed, the evidence does not even tell us whether the agents actually spoke to Mrs. Phillips, and if they did, what she did or did not say. Nor did the record clearly suggest that she was silent. We therefore conclude that the government did not violate her right against self-incrimination.

Invocation of Fifth Amendment in Noncustodial Setting May Not Be Used In Prosecution's Case in Chief (9/5/13)

Early In IRS criminal tax investigations, it is not uncommon for  the target (usually the taxpayer) to receive a surprise visit from two IRS CI special agents either at his home or his office with a request for an interview.  The IRS will read the target his modified Miranda warnings required for noncustodial interrogations.  (More robust Miranda warnings are required for custodial interrogations.)  The target is advised that he is not required to answer the questions and may consult a lawyer.

The question that has occupied courts' attention is what use the Government may make at trial of the target's conduct in that interrogation.  What if the target formally invokes his Fifth Amendment?  Can the Government use that at trial?  What if the target, without formally invoking his Fifth Amendment, asks to consult with a lawyer?  Can the Government use that response at trial.  What if the target simply refuses to answer the questions without asserting the Fifth Amendment or requesting to consult with a lawyer?

Guidance on these questions is offered by a recent Second Circuit opinion (Gerard Lynch, J.), United States v. Okatan, 728 F.3d 111 (2d Cir. 2013), here.  In that case, the opinion opens with the issue and the conclusion:

This opinion addresses Okatan's challenge to the government's use of evidence that Okatan asked to speak to a lawyer when a border patrol agent initiated an interview prior to his arrest. We conclude that use of this evidence in the government's case in chief violated Okatan's rights under the Fifth Amendment. Because we further conclude that the error was not harmless beyond a reasonable doubt, we VACATE the judgment of the district court and REMAND the case for further proceedings consistent with this opinion.

The facts, highly summarized, are:

The border patrol agent observed some unusual -- I guess, to him, suspicious -- activity by Okatan.  The agent then asked Okatan to explain the unusual activity.  Okatan gave a not implausible explanation, but one that, under the circumstances the border patrol agent apparently did not believe.  The border patrol agent warned Okatan that "lying to a federal officer is a criminal act" and then began to question Okatan.  "Okatan said that he wanted a lawyer. At that point, Boucher placed Okatan under arrest and transported him to the Champlain border patrol station."

Okatan was subsequently charged and tried for an immigration violation.  At trial, Okatan moved to suppress all statements to the border patrol agent.  The district court suppressed all statements after Okatan asked for a lawyer.  Then, during trial, the border patrol agent recounted the circumstances of the arrest, testifying specifically that Okatan had said that he wanted a lawyer.  Okatan's counsel objected and was overruled.  In closing argument, the prosecutor mentioned the request for a lawyer.  Okatan's counsel objected again and was overruled.

The Dangers of the Unrecorded Interview by Criminal Agents -- FBI or IRS (5/14/13)

A crime often trotted out in criminal tax cases is 18 USC 1001(a)(2), here, the crime of false statements.  Often, for example, the first time the taxpayer knows that he is under investigation is when two IRS CI Special agents show up at his home or office, unannounced.  The taxpayer is caught off-guard and often will respond to the questions without preparation and often without concern for precision in the words -- either in listening carefully to the questions asked or in formulating the answers given.  That interview can be a disaster.  It is true that the agents will -- at least should -- give the modified Miranda warnings that the taxpayer is not required to answer questions and may consult an attorney.  But too many taxpayers just try to muddle through.  The taxpayers answer's -- at least as perceived by the agents -- then sometimes become the subject of a false statements charge.  Often the taxpayers perception of his answers is very different than the agents.  After the interview, one of the agents will prepare a memorandum of the interview with the Agents' version of what the taxpayer said, and have the other agent sign off on it -- so there is a contemporaneous record verified by two witnesses (not wholly disinterested witnesses, I might add).  The taxpayers' version of what he was asked and what he said may be very different, but he does not have a witness and often either does not remember crisply or does not contemporaneously commit to writing what he believes he said.  The Agents' memorandum and their memories reinforced by the memorandum can then be powerful evidence against the taxpayer.  So, it has been asked, when the stakes are so high, why don't  the CI Agents voice record the interview so that anyone in the future will then know the question asked and the answer given and something of the ambiance as permitted by the voice recording?

David Drumm, a guest blogger on the Jonathan Turley Blog, addresses this question in the context of interviews by FBI agents.  Why the FBI Doesn't Record Interrogations (Jonathan Turley Blog 5/11/13), here.  He starts off:

At a time when recording a conversation is as easy as whipping out a cellphone or iPod, the FBI policy on electronic recording of witness interviews is: “agents may not electronically record confessions or interviews, openly or surreptitiously, unless authorized by the SAC or his or her designee.” Instead FBI agents take notes and later type up a summary report called a form 302. The interview takes place with two FBI agents and the single interviewee. The FBI has eschewed the objective for the subjective.