Tuesday, June 27, 2017

Supreme Court Grants Certiorari in Marinello Involving Whether § 7212(a)'s Omnibus Clause Requires Knowledge of Pending Investigation (6/27/17)

By order dated 6/27/17, here, the Supreme Court granted certiorari in Marinello v. United States (Sup. Ct. Dkt. No. 16-1144).   The panel opinion of the Second Circuit is United States v. Marinello, 839 F.3d 209 (2d Cir. 2016), here (official) and here (Casetext).  The denial of petition for rehearing en banc is here.  (Note  that the denial of petition for rehearing en banc has a great dissent by Judge Jacobs (see my blog entry below).)

  • The petition is here.  The petition states the issue as:
Section 7212(a) of the Internal Revenue Code includes the following provision:
Whoever corruptly or by force … endeavors to intimidate or impede any officer … of the United States acting in an official capacity under this title, or in any other way corruptly or by force … endeavors to obstruct or impede[] the due administration of this title, shall, upon conviction thereof, be fined not more than $5,000, or imprisoned not more than 3 years, or both . . . . 
26 U.S.C. § 7212(a) (emphasis added). 
The question presented is whether § 7212(a)’s residual clause, italicized above, requires that there was a pending IRS action or proceeding, such as an investigation or audit, of which the defendant was aware when he engaged in the purportedly obstructive conduct
  • The Government's Brief in Opposition is here.  The Government states the issue as:
Whether a conviction under 26 U.S.C. 7212(a) for corruptly endeavoring to obstruct or impede the due administration of the tax laws requires proof that the defendant acted with knowledge of a pending Internal Revenue Service action.
  • The petitioner's reply is here.
  • The Amicus Brief of the American College of Tax Counsel in favor of granting the petition is here.
  • The Amicus Brief for the Cause of Action Institute and the NACDL is here.
  • The docket entries are here.
  • The Scotusblog page for the case (with docket entries) is here.
My previous blogs on Marinello or prominently mentioning Marinello are:
  • Second Circuit Rejects Aberrational Sixth Circuit Opinion in Kassouf on Requirements for § 7212(a) Tax Obstruction (Federal Tax Crimes Blog 10/15/16), here.
  • Great Second Circuit Dissent on Potential Overreach in Tax Obstruction (Federal Tax Crimes Blog 2/28/17), here.
  • Fifth Circuit Joins Majority Decisions that § 7212(a) Requires No Pending Investigation (Federal Tax Crimes Blog 5/28/17), here.
JAT Comments:

1.  Although there is a circuit split, the one case creating the split -- Kassouf in the Sixth Circuit -- has been so narrowed by subsequent cases in the Sixth Circuit that I am a bit surprised the Court would take the case.  Nevertheless, although narrowing Kassouf, the Sixth Circuit has not overturned it, thereby causing the split to linger.

2.  Given the limited number of tax cases accepted for certiorari, this probably does not bode well for Daugerdas' Petition.  See Daugerdas Grasps for the Supreme Court (Federal Tax Crimes Blog 6/26/17), here.

3.  I am not sure that a Government loss would do anything other than encourage it to charge the pattern affected as a defraud / Klein conspiracy.  See Court Rejects Dismissal of Superseding Indictment and Defraud Conspiracy Count As Substitute for Dismissed Tax Obstruction Count (Federal Tax Crimes Blog 4/13/17), here.  The CTM used to say that tax obstruction under § 7212(a) was a one-person defraud / Klein conspiracy.  For most significant tax crimes, there will be at least one person close enough to be a co-conspirator, since only a slight connection is required.  See Ninth Circuit Affirmance in Tax Convictions; Comments on Slight Evidence Formulation (Federal Tax Crimes Blog 6/20/17), here.  This calls to mind Judge Easterbrook's famous lament that "prosecutors seem to have conspiracy on their word processors as Count I; rare is the case omitting such a charge."  United States v . Reynolds, 919 F.2d 435, 439 (7th Cir. 1990).  Another sound-bite from  Judge Learned Hand:  conspiracy is "the darling of the modern prosecutor's nursery."  Harrison v. United States, 7 F.2d 259, 263 (2d Cir. 1925).  And, even where a conspiracy cannot be charged because there really is a lone-wolf actor, almost invariably there will be an investigation of some sort in most of the cases that have been charged as tax obstruction.  So, only a smaller subset of cases will be affected, and undoubtedly some other charge can be made -- for example, evasion with the obstructive acts being treated as affirmative acts of evasion.

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