Wednesday, January 17, 2018

Perjury and False Statements -- Is There a Literal Truth Defense? (1/17/18)

Whenever there is some commotion in Washington that calls for political-types or their enablers to give testimony (either in congressional or grand jury investigations), one of the issues that arises is whether the witness will give the testimony under oath or not.  Those with some familiarity of the criminal law related to testimony in such investigations know that there are two potential criminal regimes involved--perjury and false statement, both of which are crimes with substantial overlap.  The issue came up again today in the popular press where a witness -- Stephen Bannon -- negotiated (through his lawyers) the giving of testimony not under oath (this is often called a proffer session subject to the crime of false statement) rather than before the grand jury under oath (and thus subject to the crime  of perjury).

This frequently arises in a tax crimes setting where the witness -- who may be a putative target or subject of the investigation depending upon how the prosecutor feels for that day (I'll not get into that now) -- might prefer not to be under oath and thus might want his lawyer to "negotiate" (with an appropriate Queen for a Day letter) a proffer session rather than testifying under oath in the grand jury (assuming he might even be tempted for not assert his Fifth Amendment privilege in the grand  jury room).  One reason is that the witness may feel less exposure under a false statement criminal regime rather than a perjury criminal regime.  So, I thought I would do a quick survey of some  of the issues that have concerned me about the differences between perjury and false statements.

First, the statutes:

Perjury, 18 USC § 1621(1), here.
§ 1621 - Perjury generally
(1) having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed, is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true; or
(2) in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true;
is guilty of perjury and shall, except as otherwise expressly provided by law, be fined under this title or imprisoned not more than five years, or both. This section is applicable whether the statement or subscription is made within or without the United States.
Perjury before the Grand Jury, § 1623, here.
§ 1623 - False declarations before grand jury or court
(a) Whoever under oath (or in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code) in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information, including any book, paper, document, record, recording, or other material, knowing the same to contain any false material declaration, shall be fined under this title or imprisoned not more than five years, or both.
[I omit the balance of § 1623 which does have some interesting features such as where two inconsistent statements are made under oath, the crime does not require that the Government prove which is false except that it is a defense if the witness believed each statement to be true at the time  he made the statement; the witness' ability to purge the crime by acting within the court or grand jury setting, and eliminating the two witness rule to prove perjury.]

False Statement, § 1001, here.
§ 1001 - Statements or entries generally
(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—
(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
(2) makes any materially false, fictitious, or fraudulent statement or representation; or
(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;
shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both. If the matter relates to an offense under chapter 109A, 109B, 110, or 117, or section 1591, then the term of imprisonment imposed under this section shall be not more than 8 years.
First, note that there is a materiality requirement for each of the crimes described.  (Tax perjury, § 7206(1) also has a materiality requirement.)

Second, note that the parallel between perjury and false statements seems to be in § 1001(a)(2).  I will return at the end of this blog entry to § 1001(a)(1).

Third, as interpreted for perjury, “the uncorroborated oath of one witness is not enough to establish the falsity of the testimony of the accused set forth in the indictment.” Hammer v. United States, 271 U.S. 620, 626 (1926).  This two witness rule does not apply to the perjury crime described in § 1623 for court or grand jury testimony.

Fourth, and this is the principal focus of this blog, the issue is whether the scope of the criminalized false statement in § 1001(a)(2) is broader than the scope of the perjury statute in § 1621.  Specifically, the issue is whether literally true but misleading statements may constitute either perjury or false statements criminalized in these provisions.  I will summarize here what I understand to be the state of play on that issue, however for my more detailed analysis, I refer readers to my discussion in Michael Saltzman and Leslie Book, IRS Practice and Procedure (Thomsen Reuters 2015), at ¶ 12.03[4][c][v] Literal truth; relationship to perjury.  (Caveat, I am the principle draftsman of Chapter 12, Criminal Penalties and the Investigation Function; for those who do not have access to the Saltzman text, most of what I relate there are in the latest draft of my Federal Tax Crimes book, now discontinued but which can be downloaded from SSRN here and in a prior blog, The Limits of Literal Truth as Defense to Perjury (or Even 18 USC 1001) (7/24/10), here.)

So, my summary is this: 

Perjury (including tax perjury) requires that the statement be false.  Literal truth of the statement is a defense, even if the statement was misleading.  Bronston v. United States, 409 U.S. 352 (1973).  Most courts have generally equated the scope of the false statement statute with the Bronston holding, so that a literally true statement even if misleading cannot be prosecuted.  E.g., United States v. Good, 326 F3d 589, 592 (4th Cir. 2003).  I say most. 

There is some authority that suggests that literal truth may not be a complete defense to the false statement crime as it is with the perjury crime.  Here is what the CTM says about that (CTM 24.05 False statements or Representations, here):
The Second Circuit has stated that a conviction for a false statement or false representation requires evidence of actual falsity. United States v. Stewart, 433 F.3d 273, 319 (2d Cir. 2006) (citing United States v. Diogo, 320 F.2d at 902)). The court has also stated that a defendant may not be convicted under Section 1001 for a statement that is, although misleading, literally true. United States v. Mandanici, 729 F.2d 914, 921 (2d Cir. 1984) (citing Bronston v. United States, 409 U.S. 352, 359-62 (1973)).  
 In Bronston, a case involving a charge of perjury, the Supreme Court held that the burden to elicit the truth remains on the questioner and a witness may not be convicted of perjury “for an answer, under oath, that is literally true but not responsive to the question asked and arguably misleading by negative implication.” Bronston v. United States, 409 U.S. at 353 (emphasis added). However, the Supreme Court also said in Bronston, 409 U.S. at 358 n.4, that a different standard applies to criminally fraudulent statements, noting that, in that context, the law goes rather far in punishing the intentional creation of false impressions by a selection of literally true representations, because the actor himself generally selects and arranges the representations. 
 Peterson v. United States, 344 F.2d 419 (5th Cir. 1965), is illustrative. There, in response to a question whether a payment was for past earned fees or fees to be earned, a defendant submitted a letter stating that his records reflected that the payment was for accrued fees and that the fees were accordingly a deductible expense for the codefendant for a particular year. 344 F.2d at 427. On appeal, the Fifth Circuit held that whether the letter was true was a question for the jury and that even if the literal language of the letter was true as to what the records reflected, it was clearly open to the jury to find that the statement in the letter as to the payment’s being for an accrued fee was false. Id.; see also United States v. Brack, 747 F.2d 1142, 1150 (7th Cir. 1984) ("even though the statements were accurate as to the total amount of the contract they constituted false statements within the meaning of § 1001 by concealing the fraudulent nature of the contract"). 
To the CTM analysis, I make the following comments:

1. I think that DOJ Tax reads too much into the footnote statement in Bronston to breathe life into the notion that testimony under oath can be prosecuted as perjury even if literally true.

2. DOJ Tax's reliance on Peterson is, I think, not appropriate.  I think it is a bit of interpretive stretch on the case itself, but beyond that there have been later statements by the Fifth Circuit that do not give it that reading.  See e.g., United States v. Moses, 94 F3d 182, 188–189 (5th Cir. 1996) (“We cannot uphold a conviction . . . where the alleged statement forming the basis of a violation of section 1001 is true on its face.”).

3. So, in this regard, I would think that the scope of perjury and false statement is the same.  Literal truth is a defense.

4.  Nevertheless, if someone would want to be cautious about how DOJ might interpret and apply the Bronston / Peterson analysis, one might want to caution a client that there is some, at least theoretical, additional risk to the proffer session if not under oath.  (Which raises an interesting point as to whether the proffer session could be under oath and thus force the issue under the perjury statute rather than the false statement statute; I don't know the answer to that.)

Finally, I said at the beginning that I might say something about § 1001(a)(1) which criminalizes conduct by a person who "knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact."  My question is whether misleading but truthful statements, even if a complete defense under § 1001(a)(2) which we discussed above could be prosecuted under § 1001(a)(1).  I have not researched that question, but like the famous question -- "It depends upon what the meaning of the word 'is' is" -- it depends upon what the meaning of  "falsifies, conceals, or covers up by any trick, scheme, or device" is.

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