D.C. Circuit Opinion in Sprawling NonTax Case (3/4/16)

My automated daily searches picked up this opinion, United States v. McGill, 2016 U.S. App. LEXIS 3734 (DC Cir. 2016), here.  It is not a tax crimes case.  Rather, it involved charges arising from an alleged conspiracy "to run a large-scale and violent narcotics-distribution" business. Here is the part pick up by the automated searches:

Finally, while the Alfreds, Simmons, and McGill object to evidence of their failure to pay taxes during the course of the conspiracy, "[i]t is well settled that in narcotics prosecutions, a defendant's possession and expenditure of large sums of money, as well as his or her failure to file tax returns, are relevant to establish that the defendant lacked a legitimate source of income and that, in all probability, the reason for the failure to report this income is due to the defendant's participation in illegal activities." United States v. Briscoe, 896 F.2d 1476, 1500 (7th Cir. 1990); see also United States v. Chandler, 326 F.3d 210, 215 (3d Cir. 2003) (same). 

That rationale holds true here. Simmons, McGill, and Ronald Alfred all suggested that they were operating a business or otherwise supporting themselves through legitimate means. Their failure to pay taxes thus was relevant to show that they were in fact getting income from illicit activities like drug trafficking that they assuredly did not want to report to the IRS. With respect to James Alfred, he failed to object to the tax-filing evidence in district court, and the court's failure to sua sponte exclude that evidence of his lack of a licit income source while in the drug conspiracy was not plain error. See United States v. Spriggs, 102 F.3d 1245, 1257 (D.C. Cir. 1996) ("Because appellants did not make a timely objection to [admitting evidence], we review its admission for plain error.").

I will let that reasoning stand for what it is.  Of course, if the inference sought is correct, the defendants could have been charged with a tax crime -- at least failure to file, § 7203.

Several other things about the case struck me.

1. The opinion is 178 pages long in the pdf format.  That is not your ordinary opinion.  The case was argued in February 2015, so there was a long time to produce the 178 pages (and of course, the judges and their clerks were working on other cases during the period).

2. Perhaps related to the first, the opinion is "per curiam."  Per curiam may mean a number of things, but one thing it does mean is that no single judge claimed authorship.  Perhaps it was a collaborative effort of the judges and the law clerks.

3. The opinion (at least parts of it) is an interesting read.  Readers who want to dig in might look at the following  which are the parts that particularly interested me (Paragraph numbers are the courts and page numbers supplied by me are to the pdf copy).

I. Removal of Juror  (pp. 4 - 28), regarding the removal of a rogue juror.

Court Rules on Pretrial Motions for Venue, Evidence and Other Matters (12/25/15)

In United States v. Barrett, 2015 U.S. Dist. LEXIS 171727 (ED NY 2015), here, the defendant was charged with submitting false claims to the U.S., money laundering, tax perjury at the individual and corporate levels, and aiding and assisting at the corporate level.  The principal locus of the non-tax offenses was the Eastern District of New York (EDNY).  The defendant resided and filed his tax returns from the Southern District of New York (SDNY) and his tax return preparer did his work from SDNY.  The tax omissions related to the income allegedly at the center of the nontax crimes.  Asserting improper venue in EDNY, the defendant initially moved to transfer the tax counts to SDNY, and then moved to dismiss the tax counts.  In this opinion, the Court rejects the venue assertions as, on the facts, premature at this stage and deals with some other issues related to the evidence and bill of particulars.  I will address certain points here.

Prior to moving to the issues, there is an interesting cryptic statement of the nature of the allegations based on an undercover operation with respect to certain drug stores defendant directly or indirectly owned.  The indictment charge the defendant ""submitted and caused the submission of claims for reimbursement to Medicare and Medicaid for drugs purportedly dispensed from [the drug stores] which were in fact never dispensed to Medicare or Medicaid beneficiaries."  A key part of the evidence:

Three undercover patients entered Economy Drug with prescriptions that [4]  also allowed for refills. (Id.; see also Gov't Resp. at 2.) After defendant properly filled and billed the initial subscriptions, the undercover agents did not request or receive refills of their prescriptions. (Indictment P 25.) The government contends that defendant nevertheless billed Medicaid for the additional refills. (Id.)

1.  Venue.

Venue for tax crimes is generally where the defendant resides, signs the return or files the return.  However, 18 USC § 3237(b), here, provides that, where venue

is based solely on a mailing to the Internal Revenue Service, and prosecution is begun in a judicial district other than the judicial district in which the defendant resides, he may upon motion filed in the district in which the prosecution is begun, elect to be tried in the district in which he was residing at the time the alleged offense was committed.

But, the provision further provides that the motion must be filed within 20 days after arraignment.  That was the first problem with the motion.  It was filed five months after arraignment on the initial indictment.

The second problem was that venue was not based solely on mailing to the IRS as expressly required for the provision to apply.