Tax Perjury, § 7206(1) Is a Different Crime than Perjury, 18 USC § 1621 (12/25/19)

Yesterday, I was updating the working draft of my Federal Tax Procedure Book, here, for the 2020 editions to make a point about § 7206(1) here, which I and others call “tax perjury.”  See e.g., DOJ CTM 12.03 Generally, here (“Section 7206(1) is referred to as the “tax perjury statute,” because it makes the falsehood itself a crime.”) I added the caveat that tax perjury in § 7206(1) is not the crime of perjury, 18 USC § 1621.  The CTM thus cautions that “Although referred to as the ‘tax perjury statute,’ Section 7206(1) prosecutions are not perjury prosecutions.”  CTM 12.09[2] Law Of Perjury Does Not Apply To Section 7206(1) Prosecutions.  Thus features critical to perjury prosecutions (such as the two-witness rule and no corporate criminal liability) do not apply to § 7206(1) prosecutions.

In addressing this point, I discuss in a footnote Siravo v. United States, 377 F.2d 469 (1st Cir. 1967), here.  In Siravo , the defendant argued that § 7206(1) was not a perjury statute, because perjury requires false affirmative statements and the omission of income is not a false affirmative statement.  The Court held that the language of the jurat did cover such omissions because the jurat states that it is signed under penalty of perjury and the taxpayer attests under penalty of perjury that the return is true and correct, so that omitted income was clearly within the scope of the statement made under penalty of perjury covers omissions from the return (the Court treated the word "complete" in the jurat as superfluous to “true and correct”).  “Therefore, the government has made out a violation of the section, whether it be labelled a perjury statute or similar in nature,”  (Pp. 762-473 (cleaned up).  See also United States v. Cohen, 544 F. 2d 781, 783 (5th Cir. 1977) (cleaned up) (“The omission of a material fact [assets from the OIC] renders such a statement just as much not ‘true and correct’ within the meaning of§ 7206(1), as the inclusion of a materially false fact, Siravo v. United States, 377 F.2d 469 (1st Cir. 1967)."

Perjury and False Statements -- Is There a Literal Truth Defense? (1/17/18)

Whenever there is some commotion in Washington that calls for political-types or their enablers to give testimony (either in congressional or grand jury investigations), one of the issues that arises is whether the witness will give the testimony under oath or not.  Those with some familiarity of the criminal law related to testimony in such investigations know that there are two potential criminal regimes involved--perjury and false statement, both of which are crimes with substantial overlap.  The issue came up again today in the popular press where a witness -- Stephen Bannon -- negotiated (through his lawyers) the giving of testimony not under oath (this is often called a proffer session subject to the crime of false statement) rather than before the grand jury under oath (and thus subject to the crime  of perjury).

This frequently arises in a tax crimes setting where the witness -- who may be a putative target or subject of the investigation depending upon how the prosecutor feels for that day (I'll not get into that now) -- might prefer not to be under oath and thus might want his lawyer to "negotiate" (with an appropriate Queen for a Day letter) a proffer session rather than testifying under oath in the grand jury (assuming he might even be tempted for not assert his Fifth Amendment privilege in the grand  jury room).  One reason is that the witness may feel less exposure under a false statement criminal regime rather than a perjury criminal regime.  So, I thought I would do a quick survey of some  of the issues that have concerned me about the differences between perjury and false statements.

First, the statutes:

Perjury, 18 USC § 1621(1), here.

§ 1621 - Perjury generally
Whoever—
(1) having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed, is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true; or
(2) in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true;
is guilty of perjury and shall, except as otherwise expressly provided by law, be fined under this title or imprisoned not more than five years, or both. This section is applicable whether the statement or subscription is made within or without the United States.

Perjury before the Grand Jury, § 1623, here.

§ 1623 - False declarations before grand jury or court

(a) Whoever under oath (or in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code) in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information, including any book, paper, document, record, recording, or other material, knowing the same to contain any false material declaration, shall be fined under this title or imprisoned not more than five years, or both.

[I omit the balance of § 1623 which does have some interesting features such as where two inconsistent statements are made under oath, the crime does not require that the Government prove which is false except that it is a defense if the witness believed each statement to be true at the time  he made the statement; the witness' ability to purge the crime by acting within the court or grand jury setting, and eliminating the two witness rule to prove perjury.]

False Statement, § 1001, here.

§ 1001 - Statements or entries generally
(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—
(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
(2) makes any materially false, fictitious, or fraudulent statement or representation; or
(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;
shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both. If the matter relates to an offense under chapter 109A, 109B, 110, or 117, or section 1591, then the term of imprisonment imposed under this section shall be not more than 8 years.

Guilty Plea for a U.S. Offshore Account Enabler (5/26/15; 5/27/15)

DOJ Tax has announced, here, a perjury conviction for an Indiana resident, Alexander Krivosuz.  The offense is described cryptically as follows:

According to the indictment, court documents and statements made at the court proceeding, Alexander Krivozus committed perjury by testifying falsely during the course of a federal grand jury investigation of Cleveland resident, Edward Gurary, who ultimately pleaded guilty in March 2011 to one count of filing a false income tax return on which he wilfully failed to report his Swiss bank accounts.  As part of the investigation, bank records indicated that Gurary directed UBS AG to wire funds from his undeclared Swiss bank account, which was held in the name of a nominee Bahamian entity, and requested that confirmations of the transfers be sent to a U.S. fax number in the (317) area code.  The investigation established that the fax number was associated with Krivozus.  He was subpoenaed to testify before the federal grand jury and testified falsely. 

My blog entry on Gurary's plea is even more cryptic: Another Plea for Taxpayer with UBS & Credit Suisse Accounts (Federal Tax Crimes Blog 3/8/11), here.

I tried to pull down the plea agreement from the docket entries on Pacer, but the plea agreement was sealed.  That perhaps explains why the press release is so cryptic.

I was able to pull down the indictment, which is here.  The indictment states the Counts as follows:  False Statements to Law Enforcement (18 USC 1001, Two Counts),  False Declarations Before a Grand Jury (18 USC 1623(a), One Count), and Obstruction of Obstruction of an Official Proceeding (18 USC1512(c)(2), 1 Count).

Addendum 5/27/15 2:00 pm:

Ninth Circuit Reverses Barry Bonds Obstruction Conviction (4/21/15; revised 4/24/15)

The Ninth Circuit, in an en banc decision, just reversed Barry Bonds [Wikiepedia entry here] conviction for obstruction under 18 USC § 1503's omnibus clause, here, for his grand jury testimony.  United States v. Bonds, 2015 U.S. App. LEXIS 6708 (9th Cir. 2015), here. This is an important decision for tax crimes both for the grand jury context for § 1503 obstruction but also because § 7212(a), here, tax obstruction, has the same omnibus clause.  The analysis may further affect other statutory interpretations in the areas of false statements under 18 USC 1001(a), here.

When I posted on the opinion shortly after its release three days ago, I did a substantial amount of cutting and pasting because I did not have time to offer a good summary and synthesis.  So, I am revising the blog entry to delete the substantial quotations and offer more limited quotations with some of my own analysis.

First, the context.  The grand jury was investigating the use of sales enhancing drugs in sports and whether the proceeds from sales of the drugs were being laundered.  The investigation was focused on the persons providing drugs to athletes.  Athletes were not the targets of the investigation, but some were expected to testify to further the investigation.  Hence, a judicial order of immunity -- conferring use and derivative use immunity -- was given Bonds.  The grant of immunity effectively shielded Bonds from being prosecuted except for his own criminal footfaults in giving the immunized testimony.  Pursuant to the order, Bonds testified for about 3 hours.  The Government secured an indictment for false statements and obstruction based upon the testimony.  In the criminal trial, the jury acquitted on the false statement charges and convicted only for the obstruction charge.

The Q&A [referred to in the opinions as Statement C] and follow-through on which the conviction for obstruction was based (this is from Judge Kozinski's concurring opinion):

Q: Did Greg[, your trainer,] ever give you anything that required a syringe to inject yourself with?
A: I've only had one doctor touch me. And that's my only personal doctor. Greg, like I said, we don't get into each others' personal lives. We're friends, but I don't—we don't sit around and talk baseball, because he knows I don't want—don't come to my house talking baseball. If you want to come to my house and talk about fishing, some other stuff, we'll be good friends. You come around talking about baseball, you go on. I don't talk about his business. You know what I mean?
Q: Right.
A: That's what keeps our friendship. You know, I am sorry, but that—you know, that—I was a celebrity child, not just in baseball by my own instincts. I became a celebrity child with a famous father. I just don't get into other people's business because of my father's situation, you see.
Defendant was again asked about injectable steroids immediately following this exchange and a few other times during his testimony. He provided direct responses to the follow-up questions. For example, he was asked whether he ever "injected [him]self with anything that Greg . . . gave [him]." He responded [4]  "I'm not that talented, no." The government believed that those answers were false but, as noted, the jury failed to convict defendant on the false statement counts.

Bonds appealed.  The three Ninth Circuit judges originally hearing the appeal unanimously affirmed the conviction.  United States v. Bonds, 730 F.3d 890 (9th Cir. 2013), here.  The reasoning was that the testimony was evasive and misleading and thus within the scope of 18 USC 1503 even if true.

Bonds then requested en banc review.

The Ninth Circuit granted the en banc review and issued the following per curiam opinion (short enough to quote in full):

During a grand jury proceeding, defendant gave a rambling, non-responsive answer to a simple question. Because there is insufficient evidence that Statement C was material, defendant's conviction for obstruction of justice in violation of 18 U.S.C. § 1503 is not supported by the record. Whatever section 1503's scope may be in other circumstances, defendant's conviction here must be reversed. 

A reversal for insufficient evidence implicates defendant's right under the Double Jeopardy Clause. See United States v. Preston, 751 F.3d 1008, 1028 (9th Cir. 2014) (en banc) (citing Burks v. United States, 437 U.S. 1, 11, 98 S. Ct. 2141, 57 L. Ed. 2d 1 (1978)). His conviction and sentence must therefore be vacated, and he may not be tried again on that count. 

REVERSED.

Prosecuting Corporations - HSBC (2/12/15)

Most readers of this blog will already be aware that HSBC is again in the IRS / DOJ sites in a big way because of recent disclosures at it's Suiss Branch, HSBC Private Bank (Suisse) SA.  Today has another article on the potential for UK prosecution of HSBC.  Tom Bergin, UK may follow U.S. lead if pursues HSBC over tax (Reuters 2/11/15), here.  I write here to excerpt only one comment on prosecution of corporations:

HIGH HURDLE 

    While establishing jurisdiction over HSBC Private Bank (Suisse) SA could allow UK authorities to pursue HSBC, they would still face a tougher challenge than U.S. peers in bringing a case against the bank rather than individuals. 

    Tax lawyer Harry Travis said successful prosecutions against HSBC staff were more likely than against HSBC itself because under UK law, in order to convict a company of a crime, a prosecutor must usually show the highest levels of management were aware of wrongdoing and condoned it. 

    "In U.S. law, you have a very different test, a much lower test. In the U.S., companies can be prosecuted for crimes committed for their benefit by their employees or their agents."

Just yesterday, I was working on a draft of publication on U.S. tax crimes and included the following in a footnote in the draft:

At common law, breathless, lifeless corporations could not be charged with crimes.  In N.Y. Cent. & Hudson River R.R. Co. v. United States, 212 US 481, 494 (1909), the Supreme Court held that corporations could be criminally liable for the acts of agents.  see also United States v. Sun-Diamond Growers of Cal., 138 F3d 961, 970-71 (D.C. Cir. 1998), aff'd on other grounds, 526 US 398 (1999) (citing cases). For modern expansion of this concept to collective knowledge of the entity in the Bank Secrecy Act context, see United States v. Bank of New England, 821 F2d 844, 856 (1st Cir. 1987).   Generally, if an agent acts within the scope of employment in a way that reflects some intent to benefit the organization, the organization may face criminal liability.  One of the former Enron prosecutors summed it up nicely: “The legal rule is that if an agent of the organization committed a crime within the scope of employment, meaning basically while doing his job, and acted with even a partial intent to benefit the organization - in other words, not exclusively for self-interest, then the organization is criminally liable, full stop,”  Samuel Buell quoted in Jonathan D. Glater and Lynnley Browning, Deal Likely to Let KPMG Avoid Charge in Tax Case, New York Times (8/11/05).  Notwithstanding this general rule of criminal prosecution for corporations, corporations cannot be tried for some crimes.  For example, general perjury (18 USC § 1621, here) requires a false statement under oath.  Corporations cannot make statements under oath; people do.  Accordingly, the corporation cannot be tried for perjury, but the corporate agent (officer or director) so testifying can be tried for perjury.  But, tax crimes enthusiasts should be aware that, somewhat inconsistently, a corporation can be charged and convicted for tax perjury, § 7206(1) because it permits conviction of a person which the Code defines in § 7701(a)(1) to include a corporation.  See United States v. Ingredient Technology Corporation, 698 F2d 88 (2d Cir. 1984), cert. denied 462 US 1131 (1983) (Section 7206(1), here, tax perjury, prosecution). 

Ninth Circuit Affirms Barry Bonds Conviction for Obstruction (9/14/13)

The Ninth Circuit yesterday affirmed the conviction of Barry Bonds, the ball player (Wikipedia here).   United States v. Bonds, 730 F.3d 890 (9th Cir. 2013), here.  Bonds was convicted of obstruction of justice under the "omnibus clause" of 18 USC, Section 1503, here.  Section 1503's omnibus clause is the "source" for the tax obstruction omnibus clause in Section 7212(a), here.  See John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough, 9 Hous. Bus. & Tax. L.J. 255, 268-280 (2009), here.  Hence, I write on the Bonds' affirmance because the interpretations of Section 1503 will apply to tax obstruction under Section 7212(a).

The Ninth Circuit panel offers this introduction (footnote omitted):

Barry Bonds was a celebrity child who grew up in baseball locker rooms as he watched his father Bobby Bonds and his godfather, the legendary Willie Mays, compete in the Major Leagues. Barry Bonds was a phenomenal baseball player in his own right. Early in his career he won MVP awards and played in multiple All-Star games. Toward the end of his career, playing for the San Francisco Giants, his appearance showed strong indications of the use of steroids, some of which could have been administered by his trainer, Greg Anderson. Bonds's weight and hat size increased, along with the batting power that transformed him into one of the most feared hitters ever to play the game. From the late-1990s through the early-2000s, steroid use in baseball fueled an unprecedented explosion in offense, leading some commentators to refer to the period as the "Steroid Era."1 In 2002, the federal government, through the Criminal Investigation Division of the Internal Revenue Service, began investigating the distribution of steroids and other performance enhancing drugs ("PEDs"). The government's purported objective was to investigate whether the distributors of PEDs laundered the proceeds gained by selling those drugs. 

The government's investigation focused on the distribution of steroids by the Bay Area Laboratory Co-operative ("BALCO"), which was located in the San Francisco Bay Area. The government raided BALCO and obtained evidence suggesting that Anderson distributed BALCO manufactured steroids to Bonds and other professional athletes. The government convened a grand jury in the fall of 2003 to further investigate the sale of these drugs in order to determine whether the proceeds of the sales were being laundered. Bonds and other professional athletes were called to testify. Bonds testified under a grant of immunity and denied knowingly using steroids or any other PEDs provided by BALCO or Anderson. The government later charged Bonds with obstructing the grand jury's investigation. After a jury trial, Bonds was convicted of one count of obstruction of justice in violation of 18 U.S.C. § 1503. He now appeals. We affirm the conviction. 

* * * * 

On December 4, 2003, Bonds testified before the grand jury under a grant of immunity pursuant to 18 U.S.C. § 6002. The immunity order stated that "the testimony and other information compelled from BARRY BONDS pursuant to this order . . . may not be used against him in any criminal case, except a case for perjury, false declaration, or otherwise failing to comply with this order." 

The grand jury thereafter charged Bonds with several crimes, including obstruction arising from his testimony before the grand jury.  The jury convicted, "finding on the verdict form that Statement C was misleading or evasive."

3d Circuit Reverses False Statement Conviction Because Truth is a Defense (1/10/13)

In United States v. Castro, ___ F.3d ___, 2013 U.S. App. 442 (3d Cir. 2013), here, the Third Circuit reversed a conviction for false statements under 18 USC 1001, here.  Although Castro is not a tax case, the false statement charge is often made in tax cases.  Hence, Castro is worthy of consideration for the point I discuss below.

The key facts, highly summarized, is that the FBI pulled a sting operation on a Philadelphia Police Department official, Castro.  In part here pertinent, FBI money was used in the sting operation to pay Castro what was represented in the sting operation to be proceeds of a debtor, Encarnacion, of Castro paying the debt.  Castro then made statements to the FBI that "he had not received payments from [the debtor] towards the debt [the debtor] supposed owed him."  That statement was the basis of a false statement charge.  Castro was convicted of the charge but was hung on the remaining 8 counts.  Rather than face retrial, Castro entered a plea agreement with a seeming comprehensive appeals waiver.

The substantive problem, as you see, is that, even though Castro intended to make a false statement, it was in fact a true statement.  The money came from the FBI, not from the debtor.  The procedural problem was the appeals waiver.

I do not focus this blog on the appeals waiver.  Suffice it to say that the Court of Appeals got past that point.

Now, focusing on the false statement claim, the Court of Appeals held handily that Castro's intention to make a false statement was not enough; he had to make a false statement; and the statement was not false.  This gets to the literal truth defense, originating in Bronston v. United States, 409 U.S. 352 (1973).  The precise application of Bronston to 18 USC 1001 is not settled (see the concluding portion of this blog), but suffice it to say that the Third Circuit decided the case on the basis of Bronston, noting that 18 USC 1001 is a "close kin" to perjury, citing United States v. Serafini, 167 F.3d 812 (3d Cir. 1999).

I have given you the bottom-line holding.  Here is the Court's reasoning (footnote omitted):

Materiality and Corruptly in Tax Obstruction under Section 7212(a) (9/10/11)

In United States v. Bonds, 2011 U.S. Dist. LEXIS 96051 (ND CA 2011), the jury had found Barry Bonds guilty of obstruction of justice in violation of the so-called Omnibus Clause of 18 U.S.C. section 1503. The court rejected Bonds' Rule 29 for acquittal and Rule 33 for new trial. The Court's discussion is interesting for tax crime afficionados because the tax obstruction statute, section 7212(a), has its roots in the general obstruction statutes in 18 U.S.C., including specifically section 1503(a)'s Omnibus Clause. See John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough, 9 Hous. Bus. & Tax. L.J. 255, 277-314 (2009), here.

The key elements of 1503's Omnibus Clause for present purposes are: (i) the defendant must endeavor (ii) corruptly to (iii) obstruct or impede the due administration of justice. The Court has the obligatory discussion of the leading case, United States v. Aguilar, 515 U.S. 593, 598 (1995), which is fascinating but need not detain us here.

My Lawyer Did Not Advise Me of the Consequences of My Perjuring Myself in My Defense

Clecker v. United States (11th Cir. 2011) (Unpublished) is a good reminder of the dangers of a defendant testifying in a criminal case. Cleckler was charged with "conspiracy to defraud the United States, in violation of 18 U.S.C. §§ 2(b) and 371 (Count 1), and corrupt or forcible interference with the administration of the internal revenue laws, in violation of 26 U.S.C. § 7212(a) and 18 U.S.C. § 2 (Count 2)." The Government presented a number of witnesses and, apparently, Cleckler's counsel advised him that he had the right not take the stand but, given the evidence, he was at high risk if he did not. If he took the stand, the jury verdict would almost certainly turn on his credibility. The jury convicted, apparently because the jury did not find Cleckler credible. At sentencing, the judge found that Clecker perjured himself and imposed the two level obstruction of justice enhancement U.S.S.G. § 3C1.1.

Cleckler sought in a Section 2555 proceeding to vacate the sentence based on ineffective assistance of counsel -- to wit, that his trial attorney had not warned or properly warned Cleckler about the potential consequences of lying as respects exposure to the sentencing enhancement for obstruction. The district court dismissed the claim but issued a certificate of appealability on the issue of "[w]whether the district court erred by denying Cleckler's claim that his attorney failed to advise him of the consequences of testifying on his own behalf at trial." On appeal, the Eleventh Circuit affirmed in an unpublished opinion. While the opinion itself may not be worthy of publication, the circumstances are worthy of practitioners' attention.  A good, quick read.

The Limits of Literal Truth as Defense to Perjury (or Even 18 USC 1001) (7/24/10)

Bronston v. United States, 409 U.S. 352 (1973), here, is frequently cited for the proposition that literal truth is a defense to a charge of perjury. Actually, Bronston involved an unresponsive literal truth to a question not asked with the answer intended to mislead (or at least avoid the question that was not asked). Usually, the battle ground is not the unresponsive answer where the defendant raises Bronston as a defense to perjury but the responsive answer that the defendant argues is literally true. Consider this example based on United States v. Thomas, 612 F.3d 1107 (9th Cir. 2010), here, involving a charge of perjury from a Q&A in a grand jury room.

Q. Did the drug dealer give you the drugs?

A. No.

The context leading up to this crisp Q&A is clear that Government attorney used the word give in a general sense – just a transfer and not just a transfer without any consideration (drug dealers do not generally give away drugs). The grand jury witness is charged with perjury for that answer. The Government proves the drug purchase and the delivery of the drugs. Is truth a defense? No. Even though the literal question without context may be capable of more than one interpretation and it is not impossible that the grand jury witness interpreted the question in the more technical gift sense, the jury is entitled to consider context in answering the ultimate question which is not whether the witness could have had some other understanding that would make the answer literally in his or her mind, but whether the witness actually had that understanding of what the prosecutor was asking. As stated by the Ninth Circuit, the issue is “whether the jury could conclude beyond a reasonable doubt that the defendant understood the question as did the government and that, so understood, the defendant's answer was false.”

The question then arises is the relevance of these notions to 18 USC 1001, false statements, which is more often seen in tax cases where allegedly false and / or misleading statements are made to an IRS agent or, sometimes, a prosecutor in a proffer session.  Some of the earlier versions of the DOJ Tax CTM actually seemed to read Section 1001 more expansively than perjury. Consider the following from the 2001 version of the DOJ CTM 24.04: