Friday, August 17, 2018

Comments on Manafort Jury Day 1 Deliberation Questions (8/17/18)

I thought I would offer some quick additional comments on the four questions the jury asked after its first day of deliberation in the Manafort trial.  I will take the questions and Judge Ellis' answers as reported by WAPO in this article:  Manafort jury enters second day of deliberations (WAPO 8/17/18 10:49am), here, and will offer my comment after each question and answer:
First, jurors asked if someone was required to file a form called an FBAR — which is required of people with foreign bank accounts containing more than $10,000 — if they owned less than 50 percent of such an account and did not have signature authority but did have the ability to direct disbursement. At trial, Manafort’s lawyers suggested their client might have believed he did not have to file such forms, because the companies in question were set up under his consulting firm. After 2011, he shared ownership of the firm equally with his wife. 
In response, the judge read to them again the legal instructions he provided on that point Wednesday. He told the jury that along with the requirement for people who own more than 50 percent of a company with foreign bank accounts, a person must file FBARs if he “controls the disposition of money, funds, or other assets held in a financial account by direct communications.”
JAT Comments on First Question:  Although I don't have the specific instructions as given by Judge Ellis, the law is clear that the Government has to prove that Manafort actually knew of the FBAR obligation and specifically intended to violate the obligation.  (Students and practitioners in this area will recognize this as the Cheek requirement made applicable to FBARs by Ratzlaf.) This is a specific knowledge and intent crime.  (Of course the required intent assumes that the defendant knew the obligation.)  Since a defendant rarely admits the specific knowledge and intent, the Government usually proves knowledge and intent by circumstantial evidence.  I don't know the state of the record on knowledge and intent.  Now, on the more specific question of whether there was an FBAR filing obligation in the first place, I presume that, if WAPO reports the judge's instructions correctly, the obligation arises in the disjunctive (i) if Manafort owned more than 50% which he apparently didn't or (ii) if Manafort had control over the account as the judge instructed.  While it seems clear that Manafort did have overall control over the account, the finer question under the instruction  is whether he could exercise that control by direct communications to the financial institution.  I don't know whether the Government proved that beyond a reasonable doubt.  (I have to say, however, that if there were no evidence sufficient to prove that type of control, the judge presumably would have directed a verdict in Manafort's favor, so I assume that there is some evidence of the required level of control.)  Also, I wonder whether the FBAR obligation can be avoided by having some minion (such as Gates) be the person with direct communication authority and what the state of the evidence and the instructions were on that issue.  In any event, if the jury does not get comfortable with the requirements for knowledge and intent, it would seem that the beyond a reasonable doubt instruction would require the jury to find not guilty on the FBAR count.
Second, jurors asked if the judge could define “shelf company” and the filing requirements related to income. Witnesses testified at Manafort’s trial that he used so-called shelf companies — companies previously created by a lawyer in Cyprus that could be used to control the bank accounts in question — in order to move Manafort’s money. To that question, the judge said the jury would have to rely on their memory of the evidence presented at trial.
JAT Comments on Second Question:  This seems like a fair question that a jury might ask.  The report of Judge Ellis' answer is curious to me.  It seems to me that the question, as reported by the WAPO article, is asking both a factual question -- a definition of "shelf company" -- and a legal question -- the relationship of a shelf company to income (presumably as the income must be reported on the return).  If I am right, the judge could and should have answered that legal question.  Perhaps the witnesses spoke to that issue, but usually in trials witnesses do not testify as to the law; nevertheless, in constructing the unreported income, the summary witness (presumably an IRS agent) would have to base the construction of income on the law as to whether the item is taxable income.  Since it is a question infused with a legal issue, I think the judge could have offered the jury some guidance -- such as that cash earned in the way the Government alleges would be taxable if the jury finds that the cash was received by the company (I am not sure that the judge would have to go into assignment of income, sham corporations or the subpart F reporting rules).  But that suggested answer depends upon the state of the record; I don't know the state of the record.  As with my concluding FBAR question comment, if the jury does not get comfortable that the law required Manafort to report the income, then it should acquit.  (Note, though, that if the law did not require him to report the income, Judge Ellis should have instructed a verdict.)

Third, they asked if the judge could “redefine reasonable doubt.” Jurors sometimes struggle with what constitutes a reasonable doubt of someone’s guilt vs. an unreasonable doubt. The judge told them reasonable doubt “is a doubt based on reason,” but added: “The government is not required to prove guilt beyond all possible doubt.” 
Defense attorneys emphasized in their closing argument that it’s not enough to believe a defendant is “likely” guilty or even “highly likely” guilty, using a thermometer chart to make the point.
JAT Comments on Third Question:  I previously addressed this issue.  See Inspired by the Manafort Trial, On the Beyond a Reasonable Doubt Standard (Federal Tax Crimes Blog 8/15/18; 8/16/18), here.  As I note in that blog, there is no standard or accepted way to explain beyond a reasonable doubt.  If the jury does not understand the concept, then, I suppose, it may be compelled to find not guilty.
Fourth, the jurors asked if they could have an updated exhibit list, connecting each piece of evidence to the corresponding charge in the indictment. The judge said they would have to rely on their collective memory to link exhibits to specific charges.
JAT Comments on the Fourth Question:  For the jurors exhibits on their own could be a daunting task.  Perhaps in the future both parties should consider providing that link.  I think the link could be helpful to all involved -- parties and their counsel, judge and the jury (and the press and the public).

Of course, my comments as a distant observer are far less important than the observers' comments.  The WAPO article concludes:
Outside the courtroom Thursday, defense attorney Kevin Downing said that it had been “overall, a very good day for Mr. Manafort,” and he was heartened by the jury’s questions.

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