Monday, February 3, 2014

Strange Behavior Even by Tax Protestor / Defier Standards - Mens Rea for the Crime and Competence for Trial (2/3/14)

In United States v. McQuarry, 2014  U.S. Dist. LEXIS 9529 (D MN 2014),  here, the defendant "was indicted for conspiracy to defraud the United States in violation of 18 U.S.C. § 286 and for making false, fictitious, or fraudulent claims upon or against the United States in violation of 18 U.S.C. § 287."  (I quote these criminal statutes below.) The defendant fell in the category that the court described as "tax protestor," but "even by tax-protester standards, McQuarry's arguments have been strange and seem to have become stranger."  The Court gives examples of strange behavior in the pretrial skirmishing.  Focusing on the strange behavior even by tax protestor standards, the Court says:
Moreover, unlike many tax protesters, McQuarry appears to actually believe the frivolous arguments that she is making — not only to believe them, but to have become quite emotionally invested in them. In the Court's experience, some tax protesters do not appear to believe many of the arguments that they make, but appear instead to be trying to find some kind of a "loophole" to escape being held responsible for not paying taxes. Other tax protesters appear to be quite sincere, but they can at least carry on a rational conversation about their beliefs. They make arguments in a respectful and understandable way and, when their arguments are rejected, they accept the fact that the court has ruled and move on. But McQuarry appears to be unusually devoted to her views. 
For example, at a hearing on the morning of January 21, 2014, McQuarry displayed great emotion — indeed, started weeping — in frustration over the prosecutor's unwillingness to accept her offers to "settle" this case. These "settlement" offers appear to consist of McQuarry purporting to give the government permission to take money that does not really exist out of a trust account that does not really exist. Rather than take the advice of a respected and experienced defense attorney, McQuarry seems to troll the fever swamps of the Internet and to regard what she reads there not merely as presenting possible loopholes that she can exploit, but as presenting the Gospel truth — even in the absence of any evidence that these arguments have ever been accepted by a court or resulted in the acquittal of a defendant. 
McQuarry's comments at the January 21 hearing — and, more importantly, her many pro se filings — cause the Court to question whether she understands the nature of the proceedings against her. The Court has explained on multiple occasions that this is a criminal case, in which the government is accusing McQuarry of violating a criminal statute. Yet no matter how many times this is explained to McQuarry, she persists in treating this case as a private dispute over an alleged debt — a dispute that could be "settled" if the government would just take the make-believe money out of the make-believe trust account. And, indeed, someone reading McQuarry's papers — with their repeated invocations of the ancient maxims of equity and citations to archaic sources — might think that this case was being tried in 1814 in the Court of Chancery. 
McQuarry's demeanor before the Court has also become more erratic. As the Court has noted, McQuarry became highly emotional at the January 21 hearing, repeatedly interrupting the Court and weeping with frustration about the government's refusal to accept her offers to "settle." McQuarry has not before acted so emotionally during a hearing, but the government has informed the Court that McQuarry filed papers with the United States Supreme Court in which she threatened to commit suicide if she did not receive the relief she sought. Similarly, at the January 21 hearing, when the Court told McQuarry that it may have to order her detained because she rescinded her signatures on her appearance bond and on the order setting the conditions of her release [see ECF No. 144], McQuarry told the Court that it might as well "kill" her. These kind of statements are not typically made by competent litigants. 
The Court is also concerned that McQuarry gives her own highly idiosyncratic meaning to ordinary English words. For example, McQuarry told the Court at the January 21 hearing that she could not "represent" herself in this proceeding because it would require her to "re-present" herself as a human being, which, in turn, would somehow offend God. McQuarry's use of the English language is so idiosyncratic that it is difficult for the Court to carry on a conversation with her, because the Court is never certain what she is saying. 
Taken as a whole, McQuarry's behavior has raised sufficient doubt whether she lacks "a rational as well as factual understanding of the proceedings against [her] . . . ." Ghane, 593 F.3d at 780 (quotation omitted).
Based on that and the other analysis in the opinion, the Court ordered the defendant to "undergo a psychiatric or psychological examination pursuant to 18 U.S.C. § 4241(b)."

That will be done, and the outcome is now unknown.  For now, focus on the bold-face.  What immediately comes to mind is the Cheek standard for willfulness -- the element for most tax crimes.  See Cheek v. United States, 498 U.S. 192 (1991), here.  Criminal willfulness per Cheek and its progeny is the intentional violation of a known legal duty.  If that or some equivalent standard applies to the crimes for which the defendant was charged, isn't the judge signaling that a guilty conviction is unlikely even if somehow the defendant were to be found competent to stand trial?

So, I thought it would be helpful to look at the crimes charged which are:
18 USC  286 - 18 USC § 286, Conspiracy to Defraud the Government with respect to claims 
Whoever enters into any agreement, combination, or conspiracy to defraud the United States, or any department or agency thereof, by obtaining or aiding to obtain the payment or allowance of any false, fictitious or fraudulent claim, shall be fined under this title or imprisoned not more than ten years, or both. 
18 USC § 287 False Fictitious or Fraudulent Claims. 
Whoever makes or presents to any person or officer in the civil, military, or naval service of the United States, or to any department or agency thereof, any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be imprisoned not more than five years and shall be subject to a fine in the amount provided in this title.
These crimes are typically charged where a number of false claims are made other than by a taxpayer's own tax returns -- such as a preparer.  The opinion does not provide details of the crime charged.

These crimes do not have a textual requirement that the defendant have acted willfully.  Hence, the Cheek standard cannot be imported directly into these crimes.  I would argue that the terms used in these crimes certainly have some level of willfulness as contemplated by Cheek.  The defendant must certainly intend to make a "false, fictitious or fraudulent" claim which any citizen or ordinary competence would know is an intent to violate the law.  Consider the following DOJ Tax Proposed Jury Instructions (CTM 2012), here:

For § 286
To sustain the charge of conspiracy to defraud the government with respect to claims, the government must prove the following propositions:

First, the defendant entered into a conspiracy to [obtain payment; allowance; aid in obtaining payment; aid in obtaining allowance]1 of a claims against the United States Department of Treasury, a department of the United States, for tax refunds;2
[Second, the claim was false, fictitious, or fraudulent; and

Third, the defendant knew at the time that the claim was false, fictitious, or fraudulent.

Fourth, that the defendant acted with the intent to defraud.

If you find from your consideration of all the evidence that each of these propositions has  been proved beyond a reasonable doubt, then you should find the defendant guilty.

If, on the other hand, you find from your consideration of all the evidence that any of these propositions has not been proved beyond a reasonable doubt, then you should find the defendant not guilty
For § 287
In order to prove the crime of making a false claim, the government must establish beyond a reasonable doubt each of the following facts:  
First, that on or about [insert date], the defendant knowingly made or presented a claim to [the United States Department of Treasury] [or insert (1) name of person or officer in the civil or military service of the United States].  
Second, that the claim which was made or presented was a claim against the United States or a department or agency of the United States. \ 
 Third, that the claim was false, fictitious, or fraudulent.  
 Fourth, that the false statement contained in the claim was material.1 
 Fifth, that the defendant knew that the claim was false, fictitious, or fraudulent. 
The CTM explains the Fifth Element -- Knowledge that Claim Was False -- as follows:
The fifth element the government must prove beyond a reasonable doubt is that the defendant had knowledge that the claim was false or fictitious or fraudulent.  
An act is not done unlawfully or with knowledge of its false or fictitious or fraudulent character if it is done by mistake, carelessness, or other innocent reason.  
It is not necessary, however, that the government proves that the defendant had exact knowledge of the relevant criminal provisions governing his conduct. You need only find that the defendant acted with knowledge that the claim was false, fictitious, or fraudulent.
While the McQuarry opinion does not go into detail as to the nature of the false claims, one has to wonder whether the Government can obtain a conviction in this case -- or even try.  I suppose that may be determined when the competency results are returned, but the bold-faced language above certainly raises the question.  And the issue is not whether she is competent to stand trial, but whether she committed the crime in the first place.

See also my article where I suggest that other tax crimes where the term willfully is not used have language that, as interpreted, creates an equivalent mens rea element.  John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough, 9 Hous. Bus. & Tax. L.J. 255 (2009), here and an online appendix with examples, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough? Online Appendix, 9 Hous. Bus. & Tax L.J. A-1 (2009), here.

Note also that this court, like many courts, continue to use the term tax protestor for these types of cases.  The Government prefers the term tax defier for cases that it prosecutes, with the thought that ax protestor suggests some sincerely held, albeit misguided, belief that tax is not owed.  In the context of this case, perhaps tax protestor is the right word.

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