Saturday, June 8, 2024

Fourth Circuit Rejects Defendant's Collateral Attacks on Tax Perjury and Obstruction Convictions (6/8/24)

In United States v. Sutherland, ___ F.4th ___, 2024 U.S. App. LEXIS 13117 (4th Cir. 2024), CA4 here and GS here, the Court rejects the criminal defendant’s collateral attacks on convictions for filing false tax returns and obstructing an official proceeding. (The latter conviction was for delivering false documents to the government attorney assisting the grand jury in the tax crimes investigation.) The collateral attacks were mounted by a petition under 28 USC § 2255 and a petition for the writ of coram nobis. The principal claim for both methods of collateral attack was an alleged ineffective assistance of counsel (“IAC”) at the criminal trial where the defendant was convicted. The defendant appealed the convictions, and the Fourth Circuit affirmed. United States v. Sutherland, 921 F.3d 421 (4th Cir. 2019), GS here; see also Obstruction Conviction Affirmed for Presentation of False Documents to AUSA Serving as Attorney for Government for Grand Jury (4/26/19), here.

I post to this blog primarily to refer readers to the excellent discussion of the collateral attack remedies under § 2255 and coram nobis. Readers wanting the nuance should read the opinion (19 pages, but worth the read). Key summary points are:

1. The principal IAC claim was that defendant’s trial counsel in the criminal trial gave inadequate representation at trial and at sentencing because of failure to present expert tax testimony that would have shown he did not owe the amount of tax claimed by the Government. The Court of Appeals describes this testimony at sentencing as (Slip op. 4-5):

Seeking to mitigate the U.S. Sentencing Guidelines loss calculation in his presentence report, Sutherland presented testimony from Jayne Frazier, a certified public accountant. Frazier reviewed Sutherland’s tax returns for the years 2007 to 2010 and testified that Sutherland had underreported his income by hundreds of thousands of dollars in the relevant timeframe. Despite that fact, she testified that Sutherland’s total tax liability for that period was less than the Government alleged because Sutherland failed to claim various business-expense deductions in 2008, 2009, and 2010, which, if claimed, would have reduced his taxable income for those years. Notably, however, Frazier did not independently audit Sutherland’s tax returns, and her calculations were based largely on information provided by Sutherland, much of which could not be corroborated by itemized receipts or other documentation. See, e.g., J.A. 1230 (Frazier testifying that her calculations included hundreds of thousands of dollars of unclaimed business expenses that were “all cash”). She [*5] also stated that her income calculations for Sutherland excluded approximately half of the $2 million in transfers from STS to Sutherland’s companies because it was her “understanding” that those funds came from a line of credit in favor of STS and thus would be “treated as loan advances” and not “taxable income.” J.A. 1209.

          The district court overruled Sutherland’s objection to the presentence report’s loss calculation, finding that Sutherland’s “self-reported information” to Frazier “was not reliable.”

2. In February 2021, after completing the period of supervised relief on the tax convictions but before completing the period of supervised relief on the obstruction conviction (not sure why they would be different), the defendant filed (1) the “§ 2255 petition [which] targets the obstruction conviction” and (2) the coram nobis petition which “targets the tax fraud convictions.” (Actually, the convictions were for filing false tax returns, commonly called tax perjury, rather than “tax fraud” which is commonly called tax evasion.) The Court explains why defendant chose the two collateral attack procedures (Slip Op. 6 n. 1):

Thursday, June 6, 2024

Sentencing Guidelines Amendment Eliminates Acquitted Conduct from Sentencing Calculations (6/6/24; 6/11/24)

Effective 11/1/24, the U.S. Sentencing Commission has eliminated acquitted conduct as relevant conduct under §1B1.3 to enhance sentencing calculations. See Sentencing Commission web page titled "2024 AMENDMENTS IN BRIEF: Acquitted Conduct," here

Of course, because the Guidelines were advisory, a sentencing judge did not have to consider acquitted conduct as relevant conduct in imposing sentence, although the judge might feel compelled to include acquitted conduct in calculating the advisory Guidelines sentence. Under the prior rules, the acquitted conduct could be considered only if the judge found the acquitted conduct by a preponderance of the evidence.

The announcement caveats that “This amendment does not comment on the use of uncharged, dismissed, or other relevant conduct as defined in §1B1.3.” What does that mean? Well, for example, it means that a plea bargain dismissing counts permits the sentencing judge to consider the dismissed counts as relevant conduct, provided that by sentencing the judge is convinced by a preponderance of the evidence that the defendant committed the relevant conduct crimes. Same for uncharged conduct. (PSRs often note, particularly for dismissed counts, that the sentencing calculations are the same as if the dismissed counts were counts of conviction.)

There are other amendments that are potentially applicable in tax crimes or FBAR crimes cases. Readers might want to review the Sentencing Commissioner web page titled “Amendments in Brief,” here.

Added 6/11/24 10:00 am:

I offer more on the amendment to prohibit conduct behind “not guilty” verdicts from the Guidelines sentencing calculations. I picked up this blog on the Sentencing Commissions decision: Ellen Podgor, Sentencing Commission Change - Acquitted Conduct - "Not Guilty Means Not Guilty" (White Collar Crime Blog 5/24/24), here. I just wanted to clarify why the Guidelines ever included acquitted conduct as relevant conduct and what the practical effect of the elimination of acquitted conduct in the formal Guidelines calculations may be.

Wednesday, June 5, 2024

On Unanimity - the Trump NY False Documents Conviction and Federal Conspiracy Law (6/5/24)

I will post at least this blog dealing with conceptual overlaps from the Trump trial and conviction in the New York Supreme Court (trial level).

Readers surely recall that Trump’s false records case, generally a misdemeanor, was elevated to a low-level New York felony if the records were falsified with an intent to commit or conceal another crime. The other crimes are called “predicate’ crimes. See Josh Gernstein, Judge: To convict Trump of felonies, jury does not need to unanimously agree on what 'predicate' crime he committed (Politico 5/21/24), here. At trial, the prosecutors asserted three possible other crimes: “a tax crime and violations of state or federal election law.” Id. Readers of this blog should be thoroughly familiar with use of falsified records as tax crimes. The backdrop of the underlying facts made “state or federal election law” crimes possibilities. The judge ruled and so instructed the jury that, in order to convict for the felony, the jury had to find for each count a predicate crime but need not be unanimous as to the predicate crime.

There is an analog to this holding in federal criminal law of conspiracy. Conspiracy requires, among other elements, an object to commit an offense (offense conspiracy) or defraud the Government (defraud/Klein conspiracy. 18 USC § 371, here. In the infamous Leona Helmsley criminal tax trial, the indictment charged a single count alleging both an offense conspiracy and a defraud conspiracy. United States v. Helmsley, 941 F.2d 71, 91 (2d Cir. 1991), cert. denied, 502 U.S. 1091 (1992), here.  The Court rejected the argument that, as charged, the jury did not have to be unanimous as to the type of conspiracy. The Court held that any confusion was cured by the jury instructions requiring unanimity  on “the specific object the defendant agreed to try to accomplish”). See Michael Saltzman and Leslie Book, IRS Practice and Procedure (Thomsen Reuters), current online edition at ¶ 12.03[1][c][vi][A].

There is another analog federal conspiracy law. Conspiracy requires, among other elements, an overt act. I quote the following from Michael Saltzman and Leslie Book, ¶ 12.03[1][c][vi][A] General conspiracy statute: