The Charge to the Jury on the Defraud / Klein Conspiracy in the Weil Case (12/8/14)

I write today on the single charge made in the Weil case -- the charge for the defraud conspiracy (also known as a Klein conspiracy, from United States v. Klein, 247 F.2d 908 (2d Cir. 1957), cert. denied 355 U.S. 924 (1958).  John A. Townsend, Tax Obstruction Crimes: Is Making the IRS’s Job Harder Enough?, 9 HOUS. BUS. & TAX L.J. 260 (2009) Article available here; Appendix to article available here (discussing, among other things, the Klein conspiracy).

Weil was head of UBS's wealth management business which included the services rendered to U.S. taxpayers for which UBS entered a deferred prosecution agreement with DOJ, paid $780 million and undertook other obligations.  Some UBS employees and related enablers have been charged with and convicted of conspiracy.  So there would seem to be some evidence of a conspiracy -- or perhaps more than one conspiracy -- involving UBS personnel.  The question, as I see it, presented in Weil was how far up the executive chain the conspiracy went.  Conspiracy cases often have indicted and unindicted co-conspirators.  In the closing argument, the Government attorney claimed as follows:

The Defendant can be found guilty only if all of the facts are proved -- if the Government proves beyond a reasonable doubt that it has met the elements. First -- and these are before you, and the judge read them to you -- two or more people in some way agreed to try to accomplish a shared unlawful plan.

Who are those people? The Government submits they are Mr. Weil, the defendant, Marcel Rohner, the former CEO, Peter Kurer, the former general counsel, Martin Liechti, who testified before you, Michel Guignard, client advisers like Gadola and Marti, outside enablers, Beda Singenberger and Matthias Rickenbach, the clients themselves, Mr. Goldberg, Mr. McCarthy and Mr. Stedman.

Some, but not all of those named, have been indicted and some have pled.  So the scope of the conspiracy alleged was very broad, but the ultimate object of the conspiracy was to assist the U.S. taxpayers evade U.S. tax.  As the Court instructed the jury:

He is on trial only for a conspiracy to defraud the Internal Revenue Service by assisting U.S. clients to evade their income tax obligations.

[JAT Note:  As stated, this could be viewed as an offense conspiracy, but it was charged as a defraud / Klein conspiracy; I won't get into that now, but the differences between an offense conspiracy and a defraud / Klein conspiracy are covered in my article cited above,]

The following are the conspiracy charges given to the jury (bold-faced supplied by JAT):

 Now, Count 1 in the indictment charges that the defendant knowingly and willfully conspired to defraud the Internal Revenue Service of the U.S. Department of Treasury. The indictment charges that it was an object of the conspiracy that the defendant and other alleged co-conspirators acted to increase the profits of UBS by providing unlicensed and unregistered banking services and investment advice in the United States and by other acts intended to conceal from the Internal Revenue Service the identities of the bank's U.S. clients who willfully evaded their income tax obligations by, among other things, filing false income tax returns and failing to disclose the existence of their UBS accounts to the Internal Revenue Service. 

Please note that the defendant is not charged with a substantive violation of the tax laws. 

Now, it is a federal crime for anyone to conspire or agree with someone else to defraud the United States or any of its agencies.  

To defraud the United States means to cheat the Government out of property or money or to interfere with any of its lawful Governmental functions by deceit, craft or trickery.  

A conspiracy is an agreement by two or more persons to commit an unlawful act. In other words, it is a kind of partnership for criminal purposes. Every member of the conspiracy becomes the agent or partner of every other member. 

The Government does not have to prove that all the people named in the indictment were members of the plan or that those who were members made any kind of formal agreement.

The heart of a conspiracy is the making of the unlawful plan itself. So, the Government does not have to prove that the conspirators succeeded in carrying out the plan. 

The Government does not have to prove that the members planned together all the details of the plan or the overt acts that the indictment charges would be carried out in an effort to commit the intended crime. 

The defendant can be found guilty of this crime only if all of the following facts are proved beyond a reasonable doubt: 

First, two or more people in some way agreed to try to accomplish a shared and unlawful plan. 

Second, the defendant knew the unlawful purpose of the plan and willfully joined in it. 

Third, during the conspiracy one of the conspirators knowingly engaged in at least one overt act described in the indictment, and; 

Fourth, the overt act was knowingly committed at or about the time alleged and with the purpose of carrying out or accomplishing some object of the conspiracy. 

An overt act is any transaction or event, even one which may be entirely innocent when viewed alone, that a conspirator commits to accomplish some object of the conspiracy. 

A person may be a conspirator even without knowing all the details of the unlawful plan or the names and identities of all the other alleged conspirators. 

If the defendant played only a minor part in the plan, but had a general understanding of the unlawful purpose of the plan and willfully joined in the plan on at least one occasion, that is sufficient for you to find the defendant guilty. 

Simply being present at the scene of an event or merely associating with certain people and discussing common goals and interests does not establish proof of a conspiracy.
Also, a person who does not know about a conspiracy, but happens to act in a way that advances some purpose of one, does not automatically become a conspirator. 

Now, proof of several separate conspiracies is not proof of the single overall conspiracy charged in the indictment unless one of the several conspiracies proved is the single overall conspiracy. 

You must decide whether the single overall conspiracy charged existed between two or more conspirators. If not, then you must find the defendant not guilty of that charge.  

But if you decide that a single overall conspiracy did exist, then you must decide who the conspirators were, and if you decide that the defendant was a member of some other conspiracy, not the one charged, then you must find the defendant not guilty. 

So, to find the defendant guilty, you must all agree that the defendant was a member of the conspiracy charged and not a member of some other separate conspiracy. 

Now, some of the people who may have been involved in these events are not on trial. This does not matter. There is no requirement that all members of a conspiracy be charged and prosecuted together or tried together in one proceeding. 

You will see that the indictment charges that a crime was committed on or about a certain date. The Government does not have to prove that the crime occurred on an exact date. 

The Government only has to prove beyond a reasonable doubt that the crime was committed on a date reasonably close to the date alleged. 

The word "knowingly" means that an act was done voluntarily and intentionally and not because of a mistake or by accident. 

The word "willfully" means that the act was done voluntarily and purposely with the specific intent to violate a known legal duty, that is, with the intent to do something the law forbids.\ 

* * * * 

Now, I caution you that the defendant is on trial only for the specific crime charged in the indictment. You are here to determine from the evidence in this case whether the defendant is guilty or not guilty of that specific crime. 

* * * * 

He is on trial only for a conspiracy to defraud the Internal Revenue Service by assisting U.S. clients to evade their income tax obligations.

I have bold-faced some portions of the instructions quoted to emphasize scope issues in conspiracy law which, I think, played out in the case.  I think what Weil's lawyers did was to argue that, if there were a conspiracy (perhaps they even conceded that there was), it was not the conspiracy charged in the indictment but rather was a conspiracy that did not involve Weil (and presumably other high level management).  And, from the reports that I read, the jury did not believe that the Government proved that the breadth of the conspiracy reached Weil.  Hence, the not guilty verdict.

The Court did say that the jury must determine who the members of the conspiracy were.  The jury does not, however, have to determine who all of the members of the conspiracy were.  It just needs to determine that there was a conspiratorial agreement -- requiring at least 2 persons to make an agreement.