DOJ December 2023 Publication on Tax Enforcement (12/13/24)

This blog entry will alert readers of the following publication: Misc. Authors, Tax Enforcement, 71 DOJ J. Fed. Law & Prac., No. 4 (December 2023), here.

The following is a copy and paste of the Table of Contents (presented in table format). 

Tax Enforcement

Introduction	David A. Hubbert	1
Restitution in Criminal Tax Cases: Common Pitfalls and Practical Strategies	Elissa Hart-Mahan & Hannah Cook	5
Investigating Legal Source Income Tax Cases	Todd Ellinwood & Caryn Finley	23
Follow That Lead! Obtaining and Using Tax Information in a Non-Tax Case	Andrew H. Kahl	47
Tax Fraud Involving COVID-Relief Provisions	David Zisserson	63
Attorney–Client Privilege in the Context of Tax Preparation and Tax Planning	Larry Wszalek & Stuart Wexler	79
Prosecuting Tax Obstruction Under 26 U.S.C. § 7212(a)	Gregory S. Knapp & Joseph B. Syverson	97
Sentencing Advocacy in Criminal Tax Cases—Making the Government’s Case for the Appropriate Sentence	Stanley J. Okula, Jr. & Matthew Hicks	109
A Fool for a Client: Legal and Practical Considerations When Facing Pro Se Defendants	Katie Bagley & Melissa Siskind	129
A Taxing Dilemma: Navigating the Crime–Fraud Exception in  Criminal Tax Cases	Sean Beaty & Wilson Stamm	155
Prosecuting Fraudulent Tax Return Preparers	Sarah Kiewlicz & Thomas F. Koelbl	175
Gathering and Using Foreign Evidence in Tax Cases	Kimberle E. Dodd & Nanette L. Davis	199
Monetary Claims Against the Government: When Are They Tax Refund Cases	Jason Bergmann & Richard J. Markel	223
They Don’t Make ‘Em Like They Used To: Statutory Jurisdictional Requirements in the Age of the Clear-Statement Rule	Marie E. Wicks & Michael W. May	241
Note from the Editor-in-Chief	Christian A. Fisanick	265

Although, as of today, the presentations are about a year old and there have been developments in many of the areas, still there are some real gems in the various discussions. Highly recommended for students and practitioners. As I go through the various presentations, I may post subsequent blog entries on some of the items that I think might be particularly useful for readers of this blog.

3rd Circuit Rejects Argument to Extend Marinello Pending Proceeding Requirement for Tax Obstruction to the Defraud Klein Conspiracy (1/10/22)

In United States v. Desu, 23 F.4th 224  (3rd Cir. 1/7/22), CA3 here and GS here, the Court affirmed a conviction of Desu for “tax fraud.”  The Court rejected several arguments but apparently wrote the precedential opinion to clarify the standard of review for an “an evidentiary hearing as provided in Franks v. Delaware, 438 U.S. 154 (1978).”  The Franks hearing is a general process in criminal cases rather than related to tax, so I don’t discuss it here.

The Court did address, rather perfunctorily, a tax crimes issue that has been discussed several times on this blog – whether the Supreme Court’s decision in Marinello v. United States, ___ U.S. ___, 138 S. Ct. 1101 (2018), holding that a pending administrative proceeding is required for tax obstruction can apply to and limit the tax defraud conspiracy (the Klein conspiracy) that arguably is sufficiently similar to tax obstruction as to warrant a pending administrative proceeding limitation.  The consensus of the holdings in other courts (district and circuit) has been that that aspect of Marinello does not apply to the defraud Klein conspiracy.

The Court rejected the argument.  The Court’s reasoning is short so I copy and paste pp. 231-232 (omitting a footnote):

III

     A

            Desu next argues that the two counts in the indictment alleging violations of 18 U.S.C. § 371 fail to state an offense. In those counts, the government alleges that Desu conspired “to defraud the IRS by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS to ascertain, compute, assess, and collect income taxes,” a crime known as a Klein conspiracy. App. 94, 100. Desu claims that [*8] both counts fail to state an offense under Marinello v. United States, 138 S. Ct. 1101 (2018). In Marinello, the Supreme Court held that to convict someone of obstructing or impeding the administration of the Internal Revenue Code under 26 U.S.C. § 7212(a), the government must prove that a ‘“nexus’ [existed] between the defendant’s conduct and a particular administrative proceeding, such as an investigation, an audit, or other targeted administrative action.” Id. at 1109. Desu claims that both counts fail to state an offense because they do not allege that an investigation was pending when he committed the conspiracies as required by Marinello in the separate but similar statute. 

S.G. Files Brief in Opp to Petition for Certiorari in Flynn (5/19/21; 6/17/21)

I noted previously that a petition for certiorari was filed in United States v. Flynn, 969 F.3d 873 (8th Cir. 2020), cert. docketed, 20-1129 (Feb. 17, 2021) and that the Government was to file an answer on May 19, 2021.  See Fifth Circuit Holds that the Defraud/Klein Conspiracy Does Not Have Pending Proceeding Element; Update on Cert Petition in Related Case (Federal Tax Crimes 5/8/21), here.  The Solicitor General filed the answer today, a Brief in Opposition, here.

Just to review the bidding as of today, the following key documents are on file per the docket entries, here (where the various documents can be reviewed and downloaded).

• The petition was filed 2/11/12.
• An amicus brief in support of the petition was filed by the New York Council of Defense Lawyers on 5/2/21. 
• The S.G. Brief in Opp was filed on 5/19/21.
• Flynn's Reply Brief filed on 6/7/21.  (Added to Blog 6/17/21)

The Brief in Opp is 26 pages long (substantially longer than the Briefs in Opp I drafted while with DOJ Tax Appellate, but word inflation has crept into my writings since then).  The key issue that I think readers of this blog would be most interest is (p. (I), p. 2 of the pdf):

2. Whether a charge of conspiring to defraud the United States in violation of 18 U.S.C. 371 is void for vagueness absent a requirement that the government prove a nexus between a defendant’s conduct and a particular administrative proceeding.

This issue is basically the Marinello issue I mentioned in my earlier blog.

Flynn, in the petition for certiorari, stated the issue as follows (p. i, p. 2 of the pdf):

II. Whether the requirement for a nexus between a particular administrative proceeding and a taxpayer’s conduct is necessary to save the constitutionality of a conviction under an 18 U.S.C. § 371 conspiracy to defraud the Internal Revenue Service (Klein Conspiracy) after this Court’s decision in Marinello v. United States, 138 S. Ct. 1101 (2018).

The Government states it arguments on pp. 15-23 (pp. 22-30 of the pdf).  Basically, the arguments are:

Fifth Circuit Holds that the Defraud/Klein Conspiracy Does Not Have Pending Proceeding Element; Update on Cert Petition in Related Case (5/8/21)

In United States v. Herman, 997 F. 3d 251, 273 (5th Cir. 2021), CA5 here & GS here, the Court affirmed the convictions of husband and wife, restaurant owners and operators for the defraud/Klein conspiracy and willfully filing false tax returns. 

The noteworthy holding in the opinion is that the Klein conspiracy in § 371 does not import the holding in Marinello v. United States, 584 U.S. ___, 138 S. Ct. 1101 (2018), that the tax obstruction crime (§ 7212(a)) requires a nexus to an administrative proceeding.  (See Slip Op. 25-29.) 

As the Fifth Circuit panel notes, its holding is consistent with the two other circuits’ holdings, the only circuit court cases addressing the issue.

One of the other circuit court cases was United States v. Flynn, 969 F.3d 873 (8th Cir. 2020), cert. docketed, 20-1129 (Feb. 17, 2021).  I previously wrote on the petition for cert in Flynn.  See Defendant Petitions for Cert on Relationship of Defraud Conspiracy and Marinello Interpretation of Tax Obstruction (2/22/21), here.  I thought readers might want an update on the status of the pending petition for cert in Flynn.

The Supreme Court docket entries in Flynn, here, indicate that the following key entries:

• The petition was filed 2/11/12, 
• The Government’s response is due 5/19/21 (after some extensions) 
• An amicus brief in support of the petition was filed by the New York Council of Defense Lawyers on 5/2/21.  

11th Circuit En Banc Holds that a Juror's Listening to God Does Not Alone Warranted Removal of the Juror (5/7/21)

I previously blogged on the 11^th Circuit’s panel opinion  United States v. Brown, 947 F.3d 655 (11th Cir.), vacated, reh’g en banc granted, 976 F.3d 1233 (11th Cir. 2020), here.  See Eleventh Circuit Affirms Conviction of Another Congressman (Federal Tax Crimes Blog 1/14/20; 1/16/20), here.  In relevant part, in the case with some tax counts, the panel opinion upheld the trial judge’s removal of a juror after the jury started deliberations because the juror expressed that

 "A Higher Being told me Corrine Brown was Not Guilty on all charges". He later went on to say he "trusted the Holy Ghost".

 In an en banc opinion yesterday, United States v. Brown (11th Cir. 5/6/21), here, the 11^th Circuit has reversed and remanded for a new trial.  The en banc majority opinion by Judge William Pryor opens with a good summary:

This appeal requires us to decide whether a district judge abused his discretion by removing a juror who expressed, after the start of deliberations, that the Holy Spirit told him that the defendant, Corrine Brown, was not guilty on all charges. The juror also repeatedly assured the district judge that he was following the jury  instructions and basing his decision on the evidence admitted at trial, and the district judge found him to be sincere and credible. But the district judge concluded that the juror’s statements about receiving divine guidance were categorically disqualifying. Because the record establishes a substantial possibility that the juror was rendering proper jury service, the district judge abused his discretion by dismissing the juror. The removal violated Brown’s right under the Sixth Amendment to a unanimous jury verdict. We vacate Brown’s convictions and sentence and remand for a new trial.

There are concurring and dissenting opinions, with all opinions aggregating 98 pages.

 I offer key (but lengthy) excerpts from the majority opinion (beginning on p. 22) are (substantially "cleaned up" for readability:

Because our jury system works only when both the judge and the jury respect the limits of their authority, a district judge may excuse a juror after deliberations have begun only on a finding of “good cause.” See Fed. R. Crim. P. 23(b)(3). It is well settled that good cause exists to dismiss a juror when that juror refuses to apply the law or to follow the court’s instructions. Such a juror abdicates his constitutional responsibility, and violates his solemn oath. But to remove a juror because he is unpersuaded by the Government’s case is to deny the defendant his right to a unanimous verdict. Distinguishing between these two jurors is often difficult, as the line between them can be vanishingly thin,

To guard against the danger that a dissenting juror might be excused under the mistaken view that the juror is engaging in impermissible nullification, we apply a tough legal standard for the dismissal of jurors during deliberations. Along with four of our sister circuits, we have held that, in these kinds of circumstances, a juror should be excused only when no substantial possibility exists that she is basing her decision on the sufficiency of the evidence. We have explained that this standard is basically a beyond reasonable doubt standard.

 So, for a district judge to find that this standard of proof is satisfied, he must determine with utmost certainty that a juror has refused to base his verdict on the law as instructed and the evidence admitted at trial. Although a district judge applies the same high standard of proof to dismiss a deliberating juror that a jury applies to convict a defendant, our review of their decisions is starkly different—and with good reason. When we evaluate a challenge to the sufficiency of the evidence supporting a conviction, we must view the evidence in the light most favorable to the government, drawing all reasonable inferences in favor of the jury’s verdict. And we consider only a legal question: whether any rational trier of fact could have found that the evidence established guilt beyond a reasonable doubt. We leave a jury free to choose between or among the reasonable conclusions to be drawn from the evidence. This limited review does not [*25] intrude on the jury’s role to resolve conflicts in the testimony, to weigh the evidence, and to draw reasonable inferences from basic facts to ultimate facts. After all, jurors are the sole judges of the facts. 

8th Circuit Holds that Marinello Nexus to Administrative Proceeding Need Not Separately Pled in Indictment (5/5/21)

In United States v. Prelogar, ___ F.3d ___, 2021 U.S. App. LEXIS 12899 (8th Cir. 4/30/21), here, the Eighth Circuit addressed whether indictment must contain the Marinello nuance of the tax obstruction crime (§ 7212(a)) to require a nexus between a particular administrative proceeding and the defendant’s conduct must be included in the indictment.  See Marinello v. United States, 584 U.S. ___,138 S.Ct. 1101 (2018).  The Eighth Circuit held that the nexus need not be pleaded in the indictment, so that proof at trial will suffice for conviction.

The Court’s reasoning (Slip Op. 6-7):

            While Marinello identified what the government must “show” to “secure a conviction” under section 7212(a), see 138 S.Ct. at 1109, neither Marinello nor Beckham addressed whether the nexus and knowledge requirements must be charged in the indictment, nor did those decisions invite scrutiny of the elements charged. Marinello greatly relied on Aguilar, which proclaimed a “nexus” requirement for a similar omnibus clause under 18 U.S.C. § 1503(a) that prohibits endeavoring to obstruct the due administration of justice. 515 U.S. at 600. Like Marinello, the Aguilar opinion is silent on whether the nexus requirement must be included in the charging document. While our court has not decided this question subsequent to Aguilar, federal courts that have addressed the issue have found the nexus requirement is not required to be alleged in the indictment because it is “implicit.” See, e.g., United States v. Collis, 128 F.3d 313, 317–18 (6th Cir. 1997); see also United States v. Sussman, 709 F.3d 155, 177 (3d Cir. 2013) (citing to Collis, 128 F.3d at 318 for principle that the nexus requirement is not a fourth element and instead can be addressed in jury instructions).

            This interpretation is consistent with other Supreme Court decisions that have clarified statutory elements in conjunction the government’s proof obligations. For example, in Rehaif v. United States, 588 U.S. ___, 139 S.Ct. 2191, 2200 (2019), the Supreme Court concluded that the government must prove, among other things, that a defendant had knowledge of his status as a prohibited person in felon-in-possession cases. After Rehaif, we found no error where the indictment charged a violation of 18 U.S.C. § 922(g)(5)(A) but failed to allege the defendant had knowledge of his status because the indictment tracked the statutory language. United States v. Jawher, 950 F.3d 576, 579 n.2 (8th Cir. 2020). Similarly, in Flores-Figueroa v. United States, 556 U.S. 646, 657 (2009), the Supreme Court held that in aggravated identity theft cases the government must prove the defendant had knowledge that the means of identification he unlawfully transferred, possessed, or used belonged to another person. We later upheld as sufficient an indictment that charged aggravated identity theft because, although the indictment did not plead knowledge as explained in Flores-Figueroa, it tracked the language of 18 U.S.C. § 1028A(a)(1). United States v. Dvorak, 617 F.3d 1017, 1026–27 (8th Cir. 2010).

            Count Two charged Prelogar with “corruptly endeavor[ing] to obstruct and impede the due administration” of the tax laws, by committing certain specified acts, in violation of § 7212(a). The indictment “tracks the language of the statute” and “fairly informs the defendant of the charges against him.” See Sewell, 513 F.3d at 821–22. We conclude that Marinello clarifies what must be proven to sustain a conviction under § 7212(a) but does not require that nexus and knowledge be charged in the indictment. The district court did not err in denying Prelogar’s motion to dismiss Count Two.

CA6 Affirms Tax Obstruction Conviction (3/27/21)

In United States v. Avery (6th Cir. 3/26/21)(Unpublished), CA6 here and TN here, the Court affirmed Avery’s conviction for one count of tax obstruction, § 7212(a).  This is an unpublished opinion and, in the context, a fairly routine holding.  There are, however, two items I think worth mentioning

1.  A picky point.  The Court said (Slip Op. 6):  “The Department of Justice Tax  Division indicted DeSanto, Cespedes, and Avery in February 2018.”  The judges on the panel and their clerks and the other judges on the panel should know better than that.  Grand juries indict.  (I did LEXIS-NEXIS searches on “Department of Justice Tax  Division indicted” and “Tax  Division indicted” and got no hits.  (The Avery case is apparently not yet loaded on L-N.)

2. The Court makes a footnote comment (Slip Op. 6 n. 3):

n3 We find it puzzling that Avery did not challenge the substantive reasonableness of the restitution portion of her sentence. At oral argument, Avery's attorney pointed out that Avery's actions alone were not responsible for any of the IRS's losses, and neither caused the IRS a pecuniary loss nor met any other provision of 18 U.S.C. § 3663A(c) that would mandate restitution. Nor did the government argue that Avery was responsible for Integrated's falling behind on its taxes; rather, it made clear that its only claim against Avery was that she obstructed or impeded the IRS investigation. And the record does not suggest that Avery's obstructions prevented the IRS from pursuing the delinquent taxes; indeed, the IRS issued assessments for them and has begun collecting on those assessments.

Defendant Petitions for Cert on Relationship of Defraud Conspiracy and Marinello Interpretation of Tax Obstruction (2/22/21)

I have previously blogged on the plea and resulting conviction of Scott Flynn for the defraud / Klein conspiracy.  See Eighth Circuit Holds that Marinello Pending Proceeding Nexus in § 7212(a) Does Not Apply to Defraud / Klein Conspiracy (Federal Tax Crimes Blog 8/17/20), here; and Two Cases Involving Marinello (Federal Tax Crimes Blog 1/15/19), here.  Flynn has filed a petition for certiorari (S.Ct. pdf here pdf and TN text here) presenting the following issues (Pet. p. 1):

I. Whether the due process clause of the United States Constitution, as discussed in McCarthy v. United States, 394 U.S. 459 (1969) and more recent decisions of this Court, requires discussion in open court of the elements of an 18 U.S.C. § 371 conspiracy to defraud the Internal Revenue Service (Klein Conspiracy) offense to advise the defendant of the nature of the charges against him before a guilty plea is accepted.

II. Whether the requirement for a nexus between a particular administrative proceeding and a taxpayer's conduct is necessary to save the constitutionality of a conviction under an 18 U.S.C. § 371 conspiracy to defraud the Internal Revenue Service (Klein Conspiracy) after this Court's decision in Marinello v. United States, 138 S. Ct. 1101 (2018).

III. Whether a criminal defendant is entitled to a jury trial to determine the amount of restitution under either the Sixth or Seventh Amendments to the United States Constitution.

All of the issues are important, but only the Supreme Court will determine whether they are “cert-worthy.”  

I address one issue that I have written on before – whether Marinello’s interpretation of the tax obstruction, § 7212(a), offense can or should apply to the defraud / Klein conspiracy?  See e.g., What Are the Implications for Marinello on the Defraud / Klein Conspiracy? (Federal Tax Crimes Blog 3/24/18), here; see also Great Second Circuit Dissent on Potential Overreach in Tax Obstruction (Federal Tax Crimes Blog 2/28/17), here.  Flynn argues that the defraud / Klein conspiracy is unconstitutional and can be saved by importing the Marinello analysis into the defraud / Klein conspiracy.  See pp. 20, here – 30.  I need not go over the nuance of the argument since the petition presents the position well and I have previously addressed the issue in the various Federal Tax Crimes Blog links above.  Here (p. 4), though is the fairly cryptic summary of the argument:

The charging document for the 18 U.S.C. § 371 (Klein Conspiracy) charge used all but identical language to a tax obstruction charge, 26 U.S.C. § 7212(a), that was limited by this Court in Marinello v. United States, 138 S. Ct. 1101 (2018). The same nexus limitation should have been applied here or the statute should be declared unconstitutional.

JAT Comment (added 2/22/21 at 9:00pm:

Daugerdas Fails in Post-Conviction Hail Mary Motion (2/17/21; 2/19/21)

I write today on tax criminal, Paul Daugerdas, who has been the subject of many postings on this blog.  (See here.)  After exhausting all of his conviction and other post-conviction remedies, Daugerdas in 1918 tries one other “hail Mary” shot in the form of a motion “to vacate his conviction and sentence pursuant to 28 U.S.C. § 2255.”  Daugerdas v. United States (SDNY Dkt 18cv152, Entry No. 48), Memorandum and Order dated 2/16/21, TN here & CL here).  As with his other efforts to avoid or mitigate his convictions, this one fails. 

Daugerdas’ failed effort included the common use of the ineffective assistance of counsel allegation and other “blunderbuss” claims.  Basically, the Court rejected Daugerdas’ claims that his counsel, both trial and appellate, met the standards for effective assistance of counsel within the broad range of reasonable strategic decisions made in the course of trial and appeal.  The Court also rejected other claims, including a Marinello claim to his § 7212(a), tax obstruction, conviction.  See Marinello v. United States, 584 U.S. ___, 138 S. Ct. 1101 (2018).

This is a fairly standard disposition of such claims.  The following caught my eye.

1. Daugerdas claimed that his trial counsel failed in advising him to execute pre-indictment extensions of the criminal statute of limitations.  One of his arguments was that he received no consideration for the extension and therefore, as a contract, the extension was unenforceable as a matter of basic contract law.  The Court rejected that argument (see pp. 9-10).  The Court’s holding appears to be based on one holding and one notion:  (1) as recited in the extensions, Daugerdas did receive consideration in the DOJ’s forbearance to indict immediately without the extension and the extension gave him more opportunity to argue against indictment and marshal his case for trial when indicted; and (2) in any event, possibly, a waiver of the statute of limitations is a unilateral waiver rather than a contract, thus requiring no consideration under contract law (this second holding is, stated cautiously (“Under this view”), in a footnote, p, 10 n. 4).  My comments are:

• The second holding, a standard and routine one for extensions of the civil statute of limitations under § 6501(c)(4) is, I and my former partner have argued, wrong.  John A. Townsend & Lawrence R. Jones, Jr., Interpreting Consents to Extend the Statute of Limitations, 78 Tax Notes 459 (1998), here.  The problem is that there is too much water under the bridge on this spurious notion to ever correct it.  (Regardless, the Court,  usually meticulous, miscites the name of a key case, Stange v. United States, 282 U.S. 270 (1931)).
• As I said, § 6501(c)(4) applies only to civil statute extensions.  I am not sure that authority which was based on an early version of § 6501(c)(4) (since materially changed as we note in the article), could affect criminal statute extensions.  The cases cited by the Court in the footnote are civil cases which all go back to the notion cited above which now is mainstream even if erroneous. and I am not sure that authority would govern in criminal cases.
• In all events, I can't imagine that any defense counsel would advise a client to extend the statute of limitations unless there was something for the defendant in the extension.  So, I would imagine that a court considering such a contract consideration claim for a criminal statute extension would not be able to find consideration, at least in terms of considering an ineffective assistance of counsel claim.

2. Daugerdas also raised Marinello arguments.  The Court held (pp. 15-16) that the argument was procedurally defaulted because he could have raised the Marinello-based argument before on the direct appeal.  Even though Marinello had not been decided by the direct appeal, the underlying argument could have been made (just as Marinello’s lawyers and others before Marinello made them in courts of appeals).  Daugerdas also failed to show prejudice (see below in discussing the Government’s response).

Eleventh Circuit Rejects a Marinello Claim that Nexus to Pending Proceeding Not Shown (12/6/20)

In United States v. Graham, ___ F.3d ___, 2020 U.S. App. LEXIS 37871 (11th Cir. 2020), here, the Court affirmed Graham’s convictions for (i) passing a fictitious financial instrument, in violation of 18 U.S.C. § 514(a)(2), and (ii) corruptly endeavoring to obstruct the administration of the Internal Revenue Code, in violation of § 7212(a), tax obstruction.  The tax obstruction conviction was the principle point addressed.

Graham raised a Marinello objection that his use of fictitious financial instruments to pay off his substantial tax debt that the IRS had been trying to collect for years.  As stated by the Court “The question for us is whether the IRS's collection activity qualifies as a ‘particular administrative proceeding.’ We hold that it does.”

After reviewing Marinello’s holding, the Court said (Slip Op. 6-9, footnote omitted):

So, the question is, did Graham's submission of a falsified bill of exchange to the IRS have a "relationship in time, causation, or logic" with some administrative proceeding? Graham thinks not. He suggests that "liens, levies, and related notices" do not qualify as "administrative proceedings" under Marinello. A "proceeding," he argues, must "take place over a period of time, akin to a grand jury proceeding or other investigatory proceeding," where there is "summoning of witnesses and documents" and "questioning under oath." And the IRS's tax collection activities do not bear those particular marks.

Our Court has not had occasion to further define the "nexus" requirement since Marinello. But we do not think the Court's definition of a "proceeding" was so narrow. The Supreme Court nowhere suggested that a defendant must interfere with a quasi-judicial proceeding-like Graham describes-to violate the Omnibus Clause. Indeed, the Court was careful not to identify exhaustively what qualified as an "administrative proceeding" or "other targeted administrative action." Id. at 1109-10. Its concern, instead, was to exclude relatively innocuous conduct from prosecution under the Omnibus Clause. Id. The government could not prosecute someone for interfering with "routine, day-to-day work carried out in the ordinary course by the IRS, such as the review of tax returns." Id. There had to be something more-some "targeted administrative action." Id. at 1109.

We need not draw a perimeter setting out what that "something more" encompasses. This is not a borderline case. For years, the IRS took targeted administrative action against Graham well beyond the "ordinary course" of the agency's interaction with taxpayers. It began to take specific steps to collect on Graham's tax debt in 2009. It assigned two revenue officers to his case over a five-year period. These officers issued him notices of liens and levies. They oversaw seizure and sale of some of his property. And only weeks before Graham submitted the international bill of exchange, the IRS sent him another notice of levy reminding him that he owed about $3.6 million. He even attached a copy of this notice to the $3.6 million bill of exchange that he provided to the IRS. The IRS's regular and persistent contact with Graham went well beyond the "routine, day-to-day work" of the agency and we have no difficulty concluding that this collection action qualified as a "targeted administrative action." See id. at 1109- 10.

Eighth Circuit Holds that Marinello Pending Proceeding Nexus in § 7212(a) Does Not Apply to Defraud / Klein Conspiracy (8/17/20)

In United States v. Flynn, 969 F.3d 873 (8th Cir. 2020), here, the Court opens as follows:

Scott Phillip Flynn pleaded guilty to conspiracy to defraud the United States and filing a false tax return. See 18 U.S.C. § 371; 26 U.S.C. § 7206(1). He tried to withdraw his plea before sentencing, but the district court 1  denied his motion and sentenced him to 87 months in prison—60 months for the conspiracy charge and 27 months for the false return—and ordered him to pay roughly $5.4 million in restitution. Flynn appeals, arguing that he should have been allowed to withdraw his guilty plea, his conspiracy conviction is void for vagueness, the restitution order was procedurally improper and clearly erroneous, and the district court wrongly applied an organizer or leader enhancement when it calculated his sentence. We find no error and affirm. 

The issue in the case that I think is interesting is the argument that the defraud / Klein conspiracy charge (18 USC 371) should have the same pending proceeding nexus element for tax obstruction, § 7212(a).  See Marinello v. United States, 584 U.S. ___, 138 S. Ct. 1101 (2018).  I have written on this issue before.  Basically, the issue is whether, although the defraud / Klein conspiracy statute and the tax obstruction statute are differently worded, because the interpretation of the defraud / Klein conspiracy parallels the tax obstruction statute the elements should be the same.  See What Are the Implications for Marinello on the Defraud / Klein Conspiracy? (Federal Tax Crimes Blog 3/24/18), here.  I have posted subsequent blog entries on that issue as courts have addressed the claim.  The gravamen of the case authority to date is that the tax obstruction pending proceeding nexus element does not apply to the defraud / Klein conspiracy.  The Flynn case so holds.

Flynn made the Marinello argument in the context of attempting to withdraw his guilty plea (see Slip Op. 5-6) and the argument that allegedly missing element made charge void for vagueness (see Slip Op. 8 n. 4).  The Court rejected both arguments.

The briefing in the case is quite good, so I offer here a zip file with the briefs and other submissions relevant to the Marinello issue.

One point, I omitted in my earlier discussion of the issue is the following from my most recent (now discontinued) Federal Tax Crimes Book (p. 123 n. 231, here):

In a prior version of the CTM, DOJ Tax asserted that tax obstruction may be charged where the Klein conspiracy is “unavailable due to insufficient evidence of conspiracy.”  CTM 17.02 (2001 ed.).  The 2008 version of the general subject is in § 17.00 and refers to Directive 129 which superseded Directive 77. The language quoted in the text from the 2001 version incorporating Directive 77 is omitted from the superseding Directive 129. I don't think that omission is a concession of the point, however.

The point is that, at least at one time, DOJ felt that the two crimes substantially overlapped with the critical difference being that the defraud / Klein conspiracy required more than one actor / conspirator.

Second Circuit Affirms Convictions, Rejecting Marinello and Bad Acts Evidence Arguments (7/9/20)

In United States v. Scali,  (2d Cir. 7/7/20), here, Unpublished, the Second Circuit affirmed the conviction of a prior lawyer for “ten criminal offenses, including: mail fraud, structuring cash deposits, tax violations, obstruction of justice, and perjury.”

For  most readers of this blog, the most interesting part of the decision is the discussion of Jury Instructions (Slip Op. pp. 10-11) regarding the Marinello issue.  Marinello v. United States, ___ U.S. ___, 138 S. Ct. 1101 (2018).  Marinello held that § 7212(a)’s tax obstruction crime (Omnibus Clause) requires:

• A nexus to an administrative proceeding: “a ‘nexus’ between the defendant’s conduct and a particular administrative proceeding, such as an investigation, an audit, or other targeted administrative action. That nexus requires a 'relationship in time, causation, or logic with the [administrative] proceeding.’”
• A pending or reasonably foreseeable proceeding: “the [administrative] proceeding was pending at the time the defendant engaged in the obstructive conduct or, at the least, was then reasonably foreseeable by the defendant.”

Before the Supreme Court decided Marinello, the trend in the cases was to hold that tax obstruction did not require a relationship to a pending investigation. 

In Scali, the trial occurred while the case was pending in the Supreme Court, so that the outcome was not known when the case was submitted to the jury.  The Second Circuit easily affirmed the Marinello issue because of how the district court submitted the case to the jury to address the uncertainty in Marinello outcome ((Slip Op. 10-11):

The district court, aware that the Supreme Court was considering the scope of § 7212(a) in Marinello, provided the jury with a special verdict form that required the jury to indicate whether it unanimously found that Scali committed one or more of the specified obstructive acts "after becoming aware of a pending IRS proceeding, specifically the IRS's civil collection activities." Suppl. App'x at 763 (italics in original). In finding Scali guilty of Count Five, the jury checked "Proved" next to each of the six obstructive acts listed in the special verdict form. Accordingly, the jury's findings make clear that it found the required nexus between Scali's obstructive acts and the pending IRS proceeding of which Scali was aware, rendering any Marinello error in the jury instructions non-prejudicial. See United States v. Beckham, 917 F.3d 1059, 1064-65 (8th Cir. 2019) (holding a Marinello instructional error harmless because the overwhelming evidence established the nexus and knowledge requirement), cert. denied, 140 S. Ct. 857 (2020).

New CTM discussion on § 7212(a) re Marinello (7/1/20; 7/12/20)

I was just notified the DOJ Criminal Tax Manual, here, often referred to as the "CTM," has updated the chapter on tax obstruction, § 7212(a), to reflect changes principally driven by Marinello v. United States, 584 U.S. 1 (2018).   The new discussion is here.  I have posted several entries on Marinello.  See here.  I have not yet had time to review the new discussion and likely will not for a week or so, but those having Marinello based issues will certainly want to review this new CTM discussion.

Added 7/12/20 12:15pm:

I have now had time to read the revised CTM.  The changes that seem to have been driven by Marinello should be predictable to readers who paid attention to Marinello when it was released, including contemporaneous commentary, including commentary on this blog.  I will offer here some comments and short excerpts (excerpts are cleaned up for readability).

1.  Section 17.02, titled Generally, has a good succinct discussion of § 7212(a) and the Marinello holding.

2. Section 17.04, titled Elements of the Omnibus Clause as Construed in Marinello, has a lengthier analysis of the nexus interpretation in Marinello.

3.  Section 17.04[1], titled Corruptly, discusses the corruptly element and relates it to the willfulness element for most tax crimes which may be parallel in effect.  It says that Marinello did not alter the definition, but did state: "the Court simply opined that, “practically speaking,” a taxpayer who “willfully” violates the tax code would also intend to obtain an unlawful advantage [an element of the Omnibus Clause]."

4.  Section 17.04[3], titled Omissions as Endeavors, says that conceptually omissions, at least some omissions, might be within the scope of the Omnibus Clause and that Marinello did not address that possibility.  The Section then concludes:  "Against this legal backdrop, it remains the policy of the Tax Division that a § 7212(a) Omnibus Clause prosecution should not be based upon an omission, including a failure to file a tax return, without the express authorization of the Tax Division."

Eleventh Circuit Affirms Conviction of Another Congressman (1/14/20; 1/16/20)

In United States v. Brown, ___ F.3d ___, 2020 U.S. App. LEXIS 556 (11th Cir. 2020), 11th Cir. here and CL here, Brown, a former congresswoman, was charged with 24 counts for a melange of crimes, including mail and wire fraud and conspiracy to commit, false statements, tax obstruction (§ 7212(a), one count) and tax perjury (§ 7206(1), three counts).  The jury convicted of all except 4 of the fraud counts.  On appeal, Brown argued that the trial judge had improperly dismissed a juror who, another juror reported, stated to the jurors at the beginning of deliberations that (Slip Op. 12-15):

"A Higher Being told me Corrine Brown was Not Guilty on all charges". He later went on to say he "trusted the Holy Ghost". 

The judge then questioned the juror outside the hearing of the other jury members.

Court: Okay. That's fine. So let me get a little more specific with you. Have you expressed to any of your fellow jurors any religious sentiment, to the effect that a higher being is telling you how—is guiding you on these—on these decisions, or that you are trusting in your religion to—to base your decisions on? Have you made any—can you think of any kind of statements that you may have made to any of your fellow jurors along those lines? 

Juror: I did, yes. 

Court: Okay. Can you tell me, as best you can, what you said? 

Juror: Absolutely. I told them that in all of this, in listening to all the information, taking it all down, I listen for the truth, and I know the truth when the truth is spoken. So I expressed that to them, and how I came to that conclusion. 

Court: Okay. And in doing so, have you invoked a higher power or a higher being? I mean, have you used those terms to them in expressing yourself? 

Juror: Absolutely. I told—I told them that—that I prayed about this, I have looked at the information, and that I received information as to what I was told to do in relation to what I heard here today—or this past two weeks. 

Court: Sure. When you say you received information, from what source? I mean, are you saying you received information from— 

Juror: My Father in Heaven.

First Circuit Affirms Tax Obstruction Conviction (1/9/20)

In United States v. Takesian, 945 F.3d 553 (1st Cir. 2019), CA1 here and GS here, the Court opens with this:

Greg Takesian is a certified-public-accountant-turned-tax-cheat. Or so a jury essentially concluded in convicting him of four counts of filing false tax returns, see 26 U.S.C. § 7206(1), and one count of attempting to obstruct the internal-revenue laws, see 26 U.S.C. § 7212(a). A district judge at sentencing hit him with concurrent prison terms of 24 months on each count, 12 months of supervised release following the end of his incarceration, a special assessment of $100 on each count, a $10,000 fine, and restitution totaling $286,433. None too happy with these results, Takesian argues here that the judge thrice erred: first, by letting prosecutors impeach him with his 2006 conviction for making a false statement; second, by failing to tell the jury that to convict on the obstruction count, prosecutors had to prove that he obstructed a particular tax-related proceeding that he knew about or could reasonably foresee; and third, by ordering restitution beyond what the jury found the government's tax loss to be. Disagreeing with him, we affirm.

Two of the issues on appeal may be interesting to readers of this blog – first, a Marinello issue and second, a restitution issue.

Marinello

Readers will recall that, in Marinello v. United States,138 S. Ct. 1101 (2018), here, the Court held that the obstructive acts for a conviction of tax perjury under § 7212(a), required that the Government prove that the defendant acted to obstruct a known or foreseeable investigation.  Marinello was decided after the trial in Takesian.  Takesian argued that he was entitled to a Marinello-based instruction which he did not get.  The Court rejected the argument, although agreeing with the parties that the failure to give instruction the Marinello instruction was plain error.  Plain error requires that Takesian must still prove that the error jeopardized his substantial rights–that the defendant show “‘a reasonable probability" that the flawed instruction led to a flawed conviction.”  Basically, the Court found the from the facts showed that “Takesian could reasonably foresee that an IRS investigation of him was (in Marinello's phrasing) ‘at least . . . in the offing,’” For that reason, he cannot show that the jury would have acquitted with a proper instruction.

Restitution

Takesian objected to the restitution award of $286,433.  In an unusual procedure, the trial judge submitted to the jury not only the standard questions for guilty or not guilty but also sentencing factors (including most prominently, the tax loss).  The Court explains (p. 567):

We should probably say a word about why the judge did what he did here. The government tells us without contradiction that this judge's practice is to "submi[t] . . . sentencing factors to the jury under a beyond-a-reasonable-doubt standard." And the verdict form that he used listed seven tax-loss ranges — each corresponding to an offense level, which helps set a convicted person's advisory prison range under the federal sentencing guidelines. See USSG § 2T4.1. No party complains about this procedure. So we have no occasion to weigh in on it.

Second Circuit Opines that Tax Protestor/Defier Arguments for Lack of Criminal Jurisdiction are Bogus (1/1/20)

In United States v. McLaughlin (2d Cir. Dkt 19-308-cr Opinion 12/30/19), here, McLaughlin was convicted of making false statements to IRS (presumably the charge was tax obstruction, § 7212(a)) by submitting false documents intended to have the IRS audit and assess penalties against a state judge.  McLaughlin appealed, claiming that the district court did not have jurisdiction, a genre of tax protestor/defier argument “consistent with a ‘Sovereign Citizen’ ideology.”

Courts are confronted with this genre of argument often and routinely bat them down.  So, why did the Second Circuit, which often issues summary orders in routine and frivolous cases, decide to issue a full opinion?  The Court says:

McLaughlin’s argument here goes to the very heart of our authority to hear Federal criminal cases. It raises an issue that warrants a clear statement from this Court, to deter future litigants from making similar claims.    

The bottom line, as readers of this blog would expect, that the Second Circuit holds that the district court had jurisdiction.

Short opinion.

JAT Comment:

Maybe the opinion will circulate in the communities of taxpayers to whom it is targeted.  But, I doubt that, if any are deterred by the opinion, it won’t be many and members of these communities will continue to undertake the underlying behavior resulting in their prosecution where their only or, at least, preferred "defense" is this genre of argument.

The opinion will give district court judges additional reason to summarily dispose of similar arguments.

Obstruction Conviction Affirmed for Presentation of False Documents to AUSA Serving as Attorney for Government for Grand Jury (4/26/19)

In United States v. Sutherland, 921 F.3d 421 (4th Cir. 2019), here, Sutherland was convicted of "three false tax returns and obstructing a grand jury proceeding."  The obstruction charge was under 18 U.S.C. § 1512(c)(2).  On the obstruction charge, the facts were that, through his lawyer, he submitted false documents to the AUSA who was the attorney for the government for the grand jury proceeding.  E.g., FRCrP 6(d)(1). Sutherland's argument was that the crime required a nexus to the grand jury investigation but the documents were not presented to the grand jury.  The Court easily handled the nexus argument under the key authority -- United States v. Aguilar, 515 U.S. 593 (1995) and Marinello v. United States, 584 U.S. 1 (2018).  Marinello was a tax obstruction case, but dealt with Title 18 obstruction concepts, particularly the nexus to a pending proceeding.

The Court offers an interesting discussion, probably digression, about some distinction between the AUSA's role as attorney assistant to the grand jury.  The Court starts with the proposition that an FBI investigation is not an official proceeding subject to obstruction.  A grand jury investigation is an official proceeding.  The Court said (cleaned up):

A.

Sutherland contends that the government failed to prove a nexus between his conduct and an official proceeding. He was, he says, only "attempting to influence the U.S. Attorney's Office," not the grand jury. He correctly notes—and the government does not contest—that the U.S. Attorney's investigation is not by itself an official proceeding. The term "official proceeding" is defined by 18 U.S.C. § 1515(a)(1) to include, inter alia, "a Federal grand jury" or "a proceeding before a Federal Government agency which is authorized by law." FBI investigations, for example, are not official proceedings because the statutory language including "a proceeding before a Federal Government agency which is authorized by law," § 1515(a)(1)(C), implies 'some formal convocation of the agency in which parties are directed to appear, instead of any informal investigation conducted by any member of the agency. The same logic equally applies to the investigation by the U.S. Attorney's office in this case, meaning that its investigation was not an official proceeding. 

The term "official proceeding" thus implies something more formal than a mere investigation. That limiting term prevents a statutory sprawl in which the countless communications of citizens with one agency or another of the federal government lay the groundwork for a potential obstruction prosecution. See Marinello, 138 S. Ct. at 1109-10 (reading tax obstruction statute not to extend to "routine, day-to-day work carried out in the ordinary course by the IRS," id. at 1110). This back and forth between citizens and government works as a general matter to the benefit of both. Much of this activity is a wholly legitimate effort to "influence" the government. See 18 U.S.C. § 1512(c)(2). And indeed it is not far-fetched to think that an obstruction statute encroaching too aggressively on innocent citizen/agency interactions would infringe the basic right to petition guaranteed by the First Amendment of our Constitution. See U.S. Const. amend. I ("Congress shall make no law . . . abridging . . . the right of the people . . . to petition the Government for a redress of grievances."). Then, too, a statute that chills or burdens excessively the right of persons to protest or prove their innocence in the face of a government investigation would run counter to the operation of criminal justice as we have known it. 

There are thus important safeguards to prevent the abuse of § 1512(c)(2). As the Court held in Aguilar, "it is not enough that there be an intent to influence some ancillary proceeding, such as an investigation independent of the court's or grand jury's authority." Providing materially false documents with an intent only to influence the U.S. Attorney's investigation, therefore, would not amount to a violation of § 1512(c)(2). See Young, 916 F.3d at 387 ("[T]he Government has similarly failed to provide evidence demonstrating that Young . . . designed his conduct to thwart [the grand jury] investigation, rather than designing his conduct to obstruct an FBI inquiry . . . ."). To be clear, knowingly giving false documents to a prosecutor without the intent to obstruct a grand jury may violate other federal statutes. E.g., 18 U.S.C. §§ 1001(a), 1519. Just not § 1512(c)(2). 

Section 1512(c)(2) also requires proof that a particular grand jury proceeding was "reasonably foreseeable" to a defendant who has been charged with obstructing that proceeding. While the grand jury does not yet have to be convened, it is not enough for the government to argue that a defendant could have speculated that some official proceeding lies somewhere in the offing. The Young case illustrates the point. In that case, the defendant had intentionally misled FBI agents. But this court vacated defendant's conviction because "the only way the jury could have concluded he foresaw a particular grand jury investigation would be through speculation."  

As so often in law, there is a balance to be struck. Though obstruction statutes are susceptible to abuse, they also exist for good reason. Official proceedings are crucial to the conduct of government. They are entitled to go forward free of corrupting influences that not only delay them but increase the chances of false and unjust outcomes. The federal grand jury investigation in this case is but one example of such an "official proceeding." See J.A. 1066 (jury instruction that the grand jury was an "official proceeding"). The government has every right to prosecute those who would corrupt it. Compromised proceedings in turn diminish public confidence in the workings of government and lead to the sort of creeping cynicism toward it that affects so many nations. Section 1512(c)(2) and other like statutes help to protect against that eventuality here. 

B. 

9th Circuit Affirms Convictions for Tax Perjury, § 7206(1) (3/27/19)

In United States v. Hardy, 2019 U.S. App. LEXIS 8336 (9th Cir. 2019) (unpublished), here and here, the Court affirmed the Hardy's conviction for three counts of tax perjury, § 7206(1).  The opinion is short and to the point (just over 3 pages).  Students and new tax crimes enthusiasts likely would enjoy the read, because it is informative as to some basic points.

I just pick two to cut and paste:

1. "Good faith reliance on a qualified accountant has long been a defense to willfulness in cases of tax fraud and evasion." United States v. Bishop, 291 F.3d 1100, 1106 (9th Cir. 2002). We have made clear, however, that if "the trial court adequately instructs on specific intent, the failure to give an additional instruction on good faith reliance upon expert advice is not reversible error." United States v. Dorotich, 900 F.2d 192, 194 (9th Cir. 1990) (internal quotation marks and citation omitted). The district court adequately instructed the jury on specific intent, telling it that the government was required to prove both specific intent and that Hardy did not have a good faith belief that he was complying with the law. The district court therefore did not abuse its discretion by declining to give Hardy's requested instruction about reliance on the advice of an accountant. 

* * * * 

5. The district court did not abuse its discretion in denying a new trial after its post-verdict dismissal, at the government's request, of Hardy's conviction for one count of corruptly endeavoring to obstruct the due administration of the internal revenue laws, in violation of 26 U.S.C. § 7212(a). The court appropriately rejected Hardy's argument that "spillover" evidence from the dismissed count tainted the convictions on the false tax return counts. See United States v. Lazarenko, 564 F.3d 1026, 1043-44 (9th Cir. 2009) (listing relevant factors). The court's instructions—a "critical factor," id. at 1043—delineated the different elements of each charged offense. And, the jury, although returning guilty verdicts on four of the counts in the indictment, acquitted on the remaining count. "The fact that the jury rendered selective verdicts is highly indicative of its ability to compartmentalize the evidence." United States v. Cuozzo, 962 F.2d 945, 950 (9th Cir. 1992).

 I presume that the dismissal of the tax obstruction, § 7212(a), discussed in paragraph 5 was because of the lack of proof of nexus to an investigation.

Eighth Circuit Affirms Tax Obstruction Conviction without Proper Marinello Jury Instructions (3/20/19)

In United States v. Beckham, ___ F.3d ___, 2019 U.S. App. LEXIS 6964 (8th Cir. 2019), here, the Court affirmed Beckham's conviction for tax obstruction, § 7212(a).  Beckham had been charged also with three counts of aiding and assisting, § 7206(2), but was acquitted of those counts.  So the only count of conviction was tax obstruction.

The facts in chronological order are:

• Beckham allegedly induced a taxpayer (Horseman) to participate in a tax loss scheme to offset the taxpayer's taxes.  Basically, the scheme was to generate false deductions by appearing to have a large investment in a business entity producing losses and to claim those losses as nonpassive losses despite not materially participating in the business.  The IRS began an audit.  Beckham filed power of attorney to represent the taxapyer, representing that he was a licensed  CPA but in fact he was not licensed because of a mail fraud conviction.
• The agent asked Beckham for documents supporting the taxpayer's material participation in the business.  Beckham responded with the taxpayer's day planner showing hundred of hours work in the business. 
• The agent then discovered that Beckham was not a licensed CPA as he had represented.  Beckham said that he was in the process of getting his license renewed.
• The agent then discovered that the taxpayer had not made the claimed large investment in the business generating the losses that he claimed on the returns.
• Suspecting fraud, the agent referred the taxpayer to IRS CI.  IRS CI then added Beckham as a target.  Beckham was then indicted for tax obstruction and aiding and assisting.
• The Supreme Court granted certiorari in the Marinello case to resolve a circuit conflict as to whether tax obstruction required that, in committing alleged obstructive acts, the defendant know of nexus to a pending IRS investigation.
• The case went to trial before the Supreme Court's decision in Marinello.  So, the jury instructions were framed without that decision.  But, at the Government's request, the trial court decided to use a special verdict form asking the jury whether the defendant had committed a corrupt act after becoming aware of the audit.  Here is the description of the instruction conference:

At the instruction conference, Beckham objected to Jury Instruction 9—the instruction on the § 7212(a) offense—because it did not require the jury to find that he knew about the IRS audit at the time that he committed a corrupt act. He also argued that the special verdict form—which directed the jurors, if they found Beckham guilty of that offense, to indicate whether Beckham committed "at least one corrupt act after becoming aware of the existence of an Internal Revenue Service audit or proceeding[,]" see Proposed Jury Instructions 25, Dist. Ct. Dkt. 96, and, if so, to identify which corrupt act they unanimously agreed Beckham committed after learning of the proceeding—did not cure the faulty instruction. Beckham did not, however, specifically object to the language of the special verdict form. The district court overruled his objection.

• The instructions thus did not include the key element later required by Marinello.
• The jury convicted of tax obstruction.  "On the special verdict form, the jury indicated that it found Beckham committed at least one corrupt act after learning of the audit and that it unanimously agreed Beckham committed the acts alleged in paragraph 10 of the Superseding Indictment—submitting Horseman's day planner to the IRS—after learning of the audit."
• The Supreme Court then decided Marinello, holding, as described by the Court.  

Six months after Beckham's trial, the Supreme Court decided Marinello v. United States, 138 S. Ct. 1101, 200 L. Ed. 2d 356 (2018). The Court held that, for a § 7212(a) offense, "the Government must show . . . that there is a 'nexus' between the defendant's conduct and a particular administrative proceeding[.]" Marinello, 138 S. Ct. at 1109. Further, that proceeding must be "reasonably foreseeable by the defendant" at the time he acted. Id. at 1110. Because "[i]t is not enough for the Government to claim that the defendant knew the IRS may catch on to his unlawful scheme eventually[,]" if the proceeding is currently pending, the defendant must be aware of that proceeding. Id.

Based on Marinello, the Government conceded that the jury instruction omitting the element of nexus to a known audit was error, but "that the district court cured the instructional error through the use of a special verdict form and that, even if the special verdict form did not cure the error, the error was harmless."

District Court Rejects Argument that Marinello Applies to Defraud / Klein Conspiracy (3/7/19)

In United States v. Parlato, 2019 U.S. Dist. LEXIS 33035 (W.D. NY 2019), here, the Court rejected Parato's argument that the Supreme Court's decision in Marinello v. United States, ___ U.S. ___, 138 S. Ct. 1101 (2018), limiting tax obstruction (§ 7212(a)) could similarly limit the defraud / Klein conspiracy.  The opinion is short so I do not further attempt to summarize it.  The underlying Magistrate report and recommendation is here.

Prior blog entries on this issue include the following (reverse chronological order):

• Two Cases Involving Marinello (Federal Tax Crimes Blog 1/15/19), here.
• What Are the Implications for Marinello on the Defraud / Klein Conspiracy? (Federal Tax Crimes Blog 3/24/18), here.
• More on the Marinello Transcript of Oral Argument (Federal Tax Crimes Blog 12/9/17), here.
• First Comments on the Marinello Oral Argument Transcript (Federal Tax Crimes Blog 12/6/17), here.