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Thursday, June 27, 2013

Criminal Complaints in Tax Crimes (6/27/13)

One of my co-authors of the Tax Crimes book published by LEXIS-NEXIS started a discussion among us yesterday about the role of the criminal complaint.  I thought it might be helpful to share the fruits of that discussion.  First I start with the criminal complaint that started the discussion:
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
UNITED STATES OF AMERICA
v.
YETUNDE OSENI
12902 Crickmore Trace
Bowie, MD 20720-4683
DOB 1/7/1976; SSN ***-**-5682
Defendant(s)
Case No. 13-1016 JKS
CRIMINAL COMPLAINT
I, the complainant in this case, state that the following is true to the best of my knowledge and belief. On or about the date(s) of 8/22/2009 - 11/29/2012 in the county of Prince George's in the District of Maryland, the defendant(s) violated:
Code Section: 18 U.S.C. 641
Offense Description: knowingly and unlawfully embezzle, steal, purloin and knowingly convert to her use things of value of the United States, to wit: household items and food products purchased using a government purchase card belonging to the Internal Revenue Service.
This criminal complaint is based on these facts:
See attached affidavit.
Continued on the attached sheet.
[signed]
Complainant's signature
S.A. Tracey Giannakoulias, TIGTA
Printed name and title
Sworn to before me and signed in my presence.
[signed]
Jillyn K. Schulz
Judge's signature
Date: 05/02/2013
City and state: Greenbelt, Maryland
Thomas M. DiGirolamo,
U.S. Magistrate Judge
Printed name and title
AFFIDAVIT
I, Tracey V. Giannakoulias being duly sworn, depose and state:
INTRODUCTION
I am a Special Agent with the United States Treasury Inspector General for Tax Administration (TIGTA), Washington Field Division, New Carrollton, Maryland Post of Duty. I was also a Special Agent for The United States Department of Education Office of Inspector General: I have been a special agent for the past fifteen years. I attended Treasury Inspector General for Tax Administration Special Agent Basic Training at the Federal Law Enforcement Training Center. I have a Bachelor and Master Degrees in Criminal Justice. I am duly commissioned as a Special Agent, and I am authorized to conduct criminal and other investigations arising under the laws of the United States, regulations administered by the Department of the Treasury and the Internal Revenue Service (IRS), to carry firearms, to execute and serve search or arrest warrants, to make arrests without warrant, to serve subpoenas and summons, and to require and receive information relating to such laws and regulations. I have conducted and participated in numerous investigations of criminal violations involving the IRS, including fraud, theft, embezzlement, assault and threats and attempts to interfere with the administration of IRS laws. I have executed and participated in several search warrants and seized evidence relating to criminal activity.
This affiant submits that the facts set forth in this affidavit establish probable cause to believe that YETUNDE OSENI (OSENI) has knowingly embezzled from the IRS by making unauthorized personal purchases on her government issued purchase card. It is your affiant's belief that based on the type of personal purchases made on OSENI's government issue purchase card that the items are being secreted inside OSENI'S residence.
OSENI is a secretary with the IRS in her position she is tasked with purchasing office supplies for her business unit, Applications Development, located at 5000 Ellin Road, Lanham, Maryland. On June 5, 2009, OSENI was issued Citibank Master Card number 5568 7900 0009 2816 purchase card to purchase office supplies for her business unit. In December 2012, during a routine TIGTA audit of the IRS Purchase Card Program, a sampling of OSENI's transactions revealed that she made 38 unauthorized purchases/transactions totaling $2,655.00. For each transaction, she provided altered receipts to approving officials at the IRS to cover-up the unauthorized purchases. Each time she made a purchase, she submitted what appeared to be a legitimate invoice for legitimate office purchases on behalf of the IRS. However, when I examined records obtained from the vendor, Amazon.com, I noticed that the purchases were actually for different items, detailed in attachment C. OSENI may have used her IRS issued computer or a home computer to create the fraudulent receipts and invoices. Among the items OSENI bought using the government purchase card were novels, food, a chocolate fountain, children's books and videos and baby items, a set of dinnerware, and other items not used by the IRS. Some of the books and movies were in Hindi.
OSENI began employment with the IRS in 2000 as a secretary. When she was issued the purchase card, she was given training on the proper use of the card, and she has taken such training at leaset five more times. She was told that the card was to be used for official government purposes only and not for personal use. All purchases on the card were paid for by the IRS, an agency of the United States Department of the Treasury.
In March 2013, a more in depth review of OSENI'S transactions revealed that OSENI repeatedly made numerous unauthorized transactions for personal purchases and provided the IRS with altered and falsified receipts to justify the unauthorized purchases she made from June 5, 2009 through March 13, 2013 at www.amazon.com using the IRS purchase credit card totaling $8,515.00 in government losses in violation of 18 USC 1001 False Statements, 18 USC 641 Theft, Embezzlement and Conversion and the IRS Rules of Conduct. Information that the vendor provided to the credit card company indicates that OSENI purchased various personal items with her IRS issued purchase card.
I declare that the above is true to the best of my knowledge and belief.
[signed]
S.A. Tracey Giannakoulias
202-283-3010
Sworn to before me, this 2nd day of May, 2013.
Jillyn K. Schulz
United States Magistrate Judge
I now just provide some bullet-points about the role of the criminal complaint.  Most of these points apply to federal crimes generally and at least one is unique to federal tax crimes.

1.  The complaint is not the equivalent of an indictment or information.  For a federal crime, an indictment or an information is required.  The complaint can serve two functions: (1) the complaint can permit the court to issue an arrest warrant; and (2) the complaint can extend the statute of limitations (more about this later).  The indictment (or information) must follow.

2.  The complaint is a simple document supported by an affidavit or equivalent filed by a person with knowledge of the facts recounted in the affidavit.  Rule 3, FRCrP, here; Jaben v. United States, 381 U.S. 214, 219 (1965).  The judicial officer must make an independent determination that the affidavit establishes probable cause.  Id.

3.  In the federal arena, the complaint and affidavit are signed and filed by the investigating agent.  At least locally, the practice is that an AUSA reviews and approves the documents (complaint and affidavit) before filing.  Often -- usually -- the AUSA is not present at the filing or any hearing on the filing.

4.  For tax crimes (at least those charged under Title 26), according to the DOJ CTM (quoted below), the principal role of the criminal complaint is to extend the statute of limitations if it might otherwise expire before the indictment could be obtained because of grand jury scheduling.  (An alternative is to obtain the indictment in the normal statute and then obtain a superseding indictment that does not expand the scope of the charges later; this is a problematic exercise, since any expanded charges would be dismissed.)  The following is the DOJ Tax CTM, 2012 ed.), here, discussion of the criminal complaint.  (Note that the opening page, here, says it is the 2012 edition, but the URL for the opening page, here, indicate that it is the 2008 edition.)
7.04 COMPLAINT TO EXTEND STATUTE OF LIMITATIONS

Section 6531 of Title 26 also contains a mechanism for extending the statute of limitations period. The statute provides:

Where a complaint is instituted before a commissioner of the  United States within the period above limited, the time shall be extended until the date which is 9 months after the date of the making of the complaint before the commissioner of the United
States.

26 U.S.C. § 6531. Thus, the government may file a complaint within the limitations period and effectively extend the statute period nine months.

However, Section 6531 “was not meant to grant the Government greater time in which to make its case.” Jaben v. United States, 381 U.S. 214, 219 (1965). Rather, Section 6531 “was intended to deal with the situation in which the Government has its case made within the normal limitation period but cannot obtain an indictment because of the grand jury schedule.” Jaben, 381 U.S. at 219-20; cf. United States v. O'Neal, 834 F.2d 862, 865 (9thCir. 1987) (investigation and case preparation need not cease upon filing of complaint; whether government improperly invoked extension is tested by sufficiency of the complaint at the preliminary hearing). For there to be a valid complaint triggering the extension of the limitations period under Section 6531, the complaint must allege sufficient facts to support a probable cause finding that a tax crime has been committed by the defendant. Jaben, 381 U.S. at 220. Further, to take advantage of the extension under Section 6531, the government must fully comply with the complaint process and afford the defendant a preliminary hearing. Jaben, 381 U.S. at 220.

As a practical matter, a complaint should only be filed for the year in which the statute of limitations would otherwise expire. This procedure will not preclude development before the grand jury of counts for subsequent years as to which the statute has not expired. Prosecutors should be aware, however, that the filing of a complaint may trigger the Speedy Trial Act as to the charge that is the subject of the complaint and, as a practical matter, may shorten the time within which the government may act on the remaining tax years under investigation. See 18 U.S.C. § 3161(b)
The entire Section 6531 is here.

5.  The IRS Tax Crimes Handbook, here, provides the same more succinctly:
3. Time Extension. Under I.R.C. § 6531, the statute of limitations may be extended. When an adequate complaint is instituted before a commissioner of the United States within the prescribed limitation period, the period is extended 9 months from the date of the complaint. This extension of time is not meant to allow the government additional time to develop its case, but rather is designed for use when the grand jury would not be able to return an indictment within the statutory time because of its schedule. See, Jaben v. United States, 381 U.S. 214, 219-20 (1964)
6.  If indeed the function of the Section 6531 extension is to allow time in the schedule for the grand jury, nine months appears to be an exaggerated amount of time.  I have not attempted to review the legislative history of Section 6531.

7.  I would imagine that one function of the complaint is to allow an arrest warrant to issue before an indictment can be obtained, even though the indictment could be obtained within the normal statute of limitations.  For example, if the target is about to flee the jurisdiction.

8.  Another question I have is whether DOJ Tax Division approval must be obtained before a Title 26 (or even any) crime related to taxes is the subject of a complaint.  I don't have an answer to that question, but I would think that the answer has to be yes.  I would appreciate comments or even emails from those having insight into this issue.

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