Tuesday, February 14, 2012

Defraud Conspiracy Implicitly Included in Offense Conspiracy (2/14/12)

Assume that (i) the indictment charges an offense conspiracy for some specific offense of defrauding the Government (let’s say a charge of tax evasion with multiple defendants acting in concert), (ii) a defraud conspiracy is not charged, (iii) the jury convicts, and (iv) on appeal, the offense conspiracy is found wanting.  Can the court of appeals affirm on the basis that, although not explicitly charged, the offense conspiracy charged necessarily includes a defraud conspiracy (assuming that the evidence is sufficient to support a defraud conspiracy had it been charged)?  I would have thought the easy answer is no.  But in an older case, the Eleventh Circuit suggested that the conviction could be affirmed.

For clarity here, the defraud conspiracy can apply to all conspiracies to defraud the United States or agencies thereof.  In a tax context, the defraud conspiracy is a conspiracy to defeat the lawful functioning of the IRS (a scope beyond what one might think of a defraud conspiracy).  In a tax context, the defraud conspiracy is commonly referred to as a Klein conspiracy.

In United States v. Elkins, 885 F.2d 775 (11th Cir. 1989), cert. den. 494 U.S. 1005 (1990), here, a nontax case, the defendants were charged with conspiring to commit wire fraud against the United States, 18 U.S.C. § 1343 but were not charged with a defraud conspiracy.  Based on an intervening Supreme Court case, McNally v. United States, 483 U.S. 350 (1987), the Eleventh Circuit found that specific offense conspiracy charged to have been improper.  Nevertheless, the Court held that, since the specific offense conspiracy charged necessarily included a claim that the defendants had defrauded the Government, the conviction could be sustained as a defraud conspiracy even though a defraud conspiracy had not been charged.  The Court acknowledged that it could not sustain a conviction on a theory not charged in the indictment and submitted to the jury but found, in effect, that the defraud conspiracy charge was implicit in the specific offense charged.  The Court found comfort in the fact that the judge’s instructions to the jury could be read broadly enough to cover a defraud conspiracy, although that apparently was not what the trial judge intended since the only conspiracy charged in the indictment was an offense conspiracy.

I understand what the Court said but I am skeptical.  Nevertheless, it may not be a real issue in federal tax criminal cases because, at least in the cases of which I am aware, the indictment will charge both an offense conspiracy and a defraud conspiracy.

I would appreciate readers' comments.

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