McBride #2 - Proof of Willfulness (11/13/12)

In the prior blog, I addressed the McBride court's holding that the Government's burden to prove willfulness was by a preponderance of the evidence rather than by clear and convincing evidence.  I address here the Court's holding that the Government had established McBride's willfulness in failing to file the FBARs.

I recommend that the reader go to the first blog to review the detailed and damning findings made by the Court.  See McBride #1 - Court Holds Government Must Prove FBAR Willful Penalty by a Preponderance (Federal Tax Crimes Blog 11/11/12), here.

In holding that the Government established McBride's willfulness, the Court's reasoning was as follows:

1.  Citing Safeco, the Court held that willfulness in a civil context covers "not only knowing violations of a standard, but reckless ones as well." Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57 (2004).  Then, citing the recent civil holding in Global Tech, the Court found comfort in the willful blindness concept.  Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068-69 (2011).  [JAT Note: For my discussion on Global-Tech, see Supreme Court Speaks on Willful Blindness (Federal Tax Crimes Blog 6/2/11), here; for all Federal Tax Crimes Blog discussions of willful blindness, see here.]

2.  The Court cited standard holdings (i) that civil willfulness is conduct that is voluntary, rather than accidental or unconscious and (ii) willfulness can be inferred from the circumstances, since direct proof the taxpayer's intent is rarely available, citing the lead tax evasion case of Spies v. United States, 317 U.S. 492, 499 (1943).

3.  The Court found that McBride had knowledge of his duty to comply with the FBAR requirements.

McBride #1 - Court Holds Government Must Prove FBAR Willful Penalty by a Preponderance (11/11/12)

Another court has applied a preponderance of the evidence burden in holding that the Government had established the taxpayer's willfulness for asserting the willful FBAR penalty.  McBride v. United States, 908 F. Supp. 2d 1186 (D. UT 2012), here

Here are the documents, including the Court's Findings of Fact and Conclusions of Law and the related Documents:

1. 20120514McBride-P'sTrialBrief.pdf, here.
2. 20120514McBride-D's Trial Brief.pdf, here.
3. 20120521McBride-Transcript.pdf, here.
4. 20120522McBride-Transcript.pdf, here.
5. 20120724McBride-USPropFoF&Conclusions.pdf, here.
6. 20120822McBride-D Obj re Govt Prop FoF.pdf, here.
7. 20120822McBride-DPropFoF&Conclusions.pdf, here.
8. 20121108McBride-Opinion.pdf, here.

Brief Summary of the Case

Readers will recall that the willful FBAR penalty is the greater of $100,000 or 50% of the amount in the account.  31 USC 5321(a)(5), here.  The penalty in question was the pre-10/23/04 version which provided for the same willful conduct a penalty of $25,000 or the value of the unreported account, not to exceed $100,000.

The McBride facts as found by the Court are ugly for McBride.  I won't recount them in detail, but suffice it to say they involved (i) clear intent to underreport significant amounts of income tax by diverting U.S. income to the offshore accounts, (ii) clear intent to establish the accounts out of the expected line of sight of the IRS with the purpose of furthering the evasion, (iii) information provided to him some of which he read that advised that there were reporting obligations, (iv) answers to the 1040 Schedule B questions of no when the defendant certainly knew he had interests in foreign accounts, (v) lying to the IRS about the offshore actyivity, and (vi) other really bad facts.

Commissioner's Swan Song - Excerpts on Offshore Bank Initiatives (11/8/12)

Doug Shulman, the outgoing Commissioner of Internal Revenue and principal public promoter of the IRS's and DOJ's offshore account initiatives, issued these prepared remarks before the AICPA in Washington, D.C., here.  He recounts his major initiatives, and includes the offshore accounts initiative at the top of the list.  I excerpt only the portion related to offshore accounts.

Today, I want to share with you some of the results of almost five years of relentless focus on a handful of strategic priorities we set for the IRS. The priorities are: 

•  Creating breakthrough strategies to combat international tax evasion; 

* * * * 

So, let me begin with our efforts on the international front.  Both corporations and individuals operate in the global economy, as corporations seek out new markets and individuals have global exposure through their investments, including retirement accounts. 

Yet, this fundamental shift to a more global economy has created a real set of compliance challenges for the IRS. On the individual front, we have made putting a big dent in offshore tax evasion a major priority. 

We view offshore tax evasion as an issue of fundamental fairness. Wealthy people who unlawfully hide their money offshore aren’t paying the taxes they owe, while schoolteachers, firefighters and other ordinary citizens who play by the rules are forced to pick up the slack and foot the bill.

Credit Suisse Enabler Christos Bagios Plea and Sentencing (11/7/12)

Yesterday, Christos Bagios, a Credit Suisse Banker who had been in custody for some time, pled and was sentenced.  The following are the relevant documents:

Bagios Information, here.
Bagios Plea Agreement, here.
Bagios Sentencing Minutes, here.
Bagios Judgment, here.

Key features:

Defendant:  Christos Bagios
Bank:  Former employee of Credit Suisse; also involved UBS and Neue Zuercher Bank
Count of Plea:  Defraud / Klein Conspiracy (1 count)
Tax Loss:  $1,000,000 +  (See below indicating the tax loss was at least $1,086,75)
Fine: -0-
Restitution: -0-
5K1 Departure:  Irrelevant because of plea - see discussion below.
Sentence:  37 days imprisonment - see discussion below
Court:  SD FL
Judge:  Kenneth Marra (Wikipedia here)

Comments:

1.  Type of Plea.  Normally tax pleas leave sentencing in the discretion of the Judge who is guided by the Sentencing Guidelines and Booker.  This particular plea, however, was under FRCrP 11(c)(1)(C) and (3)(A), here.  In a plea pursuant to that rule, the parties agree upon the sentence.  If the Court rejects the plea as made, either party may withdraw from the plea agreement.  Obviously, such a plea takes out some of the risk of a guilty plea.  But judges have been known to reject those pleas.  One famous instance of a judge rejecting such a plea was in the Lea Fastow case, here.  Lea Fastor was the wife of Andy Fastow of Enron fame.

Article on Tax Crimes Subjects at Seminar (11/6/12)

Tax Notes Today reports on offshore account issues and other criminal tax issues discussed at the California Tax Bar and California Policy Conference, here.  Jeremiah Coder, CI Division Monitoring Voluntary Disclosures to Ensure Follow-Through, 2012 TNT 215-1 (11/6/12).  I do not have a link to the article or permission to post  it, but summarize key points:

1.  An IRS representative said that

CI checks to ensure that taxpayers who undergo a pre-clearance check for acceptance into the voluntary disclosure programs follow through with disclosure. "Those [taxpayers] are suspect, and we are looking at those who decided not to continue to come through. Will it be Criminal Investigation? I don't know; it could be a civil audit,"

2.  The IRS representative also \

warned that taxpayers who make only partial disclosures or don't supply all the information about their offshore activity to the IRS will face severe consequences. "When [the taxpayer] is not truthful, yes, CI will come back in," and the taxpayer may be criminally liable, she said, adding that the same is true if badges of fraud or lies are uncovered during an examination.

Article on Erosion of Swiss Secrecy (11/4/12)

Michael Birnbaum, Threatened by isolation, Switzerland lifting veil on secret bank accounts (Washington Post 11/4/12), here.  The article is very good summary of the current situation.  Here are some excerpts I thought might be of interest to readers of this blog:

[W]ith the euro crisis forcing Switzerland’s revenue-starved neighbors to search out new sources of money, the Alpine country’s bank vaults are suddenly looking irresistible. In recent months, the nation’s strict banking secrecy has been under assault from countries such as Germany and Britain as never before. Experts say that the last veils may soon be dropped altogether, bringing the hush-hush tradition to a final end. 

* * * * 

Many in Switzerland’s banking capitals have resigned themselves to handing over their ledger books to international tax authorities sooner or later. In the hushed, marble-lined hallways of grand banks in Zurich and Geneva, the whispers are of a future when the country no longer serves as a hub for tax evasion. 

You can hardly understate what is happening,” said Luc Thevenoz, director of the Center for Banking and Financial Law at the University of Geneva. “Switzerland has created this image that the big value that Swiss bankers brought their clients was secrecy. It was an attractive proposition, especially with regard to tax issues.” 

No one is sure quite how much Switzerland’s private wealth management sector depends on tax evasion. Bankers’ estimates of deposits from private individuals range from 30 percent on the low end to 60 percent or more. Many say that a significant portion of those funds will drain away from Swiss coffers.

Outlier Foreign Account Case Sentencing (11/3/12)

I previously blogged on the conviction of Aristotle R. Matsa (Rick Matsa) for tax crimes.  Outlier Conviction for FBAR and Many Other Tax-Related Crimes (4/21/12), here.

DOJ announced his sentencing here.

The sentencing announcement adds little to what was known before (see prior blog) except the following:

1. The sentence is 85 months incarceration, subject to good time credit, of course.
2. The criminal fine is $265,000.
3. The restitution to the IRS is $388,000 and to a client is $24,069 for embezzlement.
4. The disclosures about the foreign account and the FBAR violation are essentially the same.

IRS Releases Names of Citizenship Renouncers (11/2/12)

The IRS has published here the names of U.S. persons renouncing citizenship.  There is a person named Lisa Ann Townsend on the list, but I don't know who she is.

The explanation is as follows:

SUMMARY: This notice is provided in accordance with IRC section 6039G of the Health Insurance Portability and Accountability Act (HIPPA) of 1996, as amended. This listing contains the name of each individual losing United States citizenship (within the meaning of section 877(a) or 877A) with respect to whom the Secretary received information during the quarter ending September 30, 2012. For purposes of this listing, long-term residents, as defined in section 877(e)(2), are treated as if they were citizens of the United  States who lost citizenship. 

For a chart showing the renouncers over the years 2005 to present, see Andrew Mitchel's International Tax Blog here.

Hat tip to Tax Prof Blog, here.

Relevant Conduct in Tax Cases (11/1/12)

A person recently posted a comment on the concept of relevant conduct, so I thought I would devote a blog to discussing the issue.  The comment was posted to the following blog entry:  An Outlier Offshore Account Tax Obstruction Plea (10/26/12), here.

The following is a cut and paste of my Federal Tax Crimes text (footnotes omitted) discussion of relevant conduct.  The text including the footnotes is available for download here.  I also provide some links at the end to related materials.  Please note that the following cut and paste is not indented to show that I am quoting.  It is my own work, so I authorize myself to do that.

8. Relevant Conduct.

Prior to the Sentencing Guidelines, the convicted defendant’s conduct beyond the offense(s) of conviction could be and was often considered in sentencing.  Basically, any thing that the sentencing judge felt should be considered in determining an appropriate sentence could be considered, so long as it was not a constitutionally prohibited factor or other matter well outside the boundaries of good judgment.  This principal was codified as follows:

No limitation shall be placed on the information concerning the background, character, and conduct of a person convicted of an offense which a court of the United States may receive and consider for the  purpose of imposing an appropriate sentence.

Render Unto Caesar and the Offshore Initiative (10/27/12)

Tax Notes Today has an article summarizing comments made by a government attorney and by practitioners at a recent annual conference sponsored by University of San Diego School of Law and the Procopio International Tax Institute.  See Stephanie Soong Johnston, IRS Advancing in Battle Against Offshore Tax Noncompliance, McDougal Says, 2012 TNT 209-8 (10/29/12)  Readers of this blog will already know the substantive content of the article, but I write just to note the concluding paragraph:

Overall, McDougal [an IRS attorney prominently involved in the offshore initiatives] was confident that good progress has been made in battling offshore tax compliance issues, both in the United States and abroad. "Consciousness is being raised about this problem," he said. "And let's face it, when you've got the Pope coming out and writing a letter talking about how harmful it is for wealthy people to be evading their taxes when the needs of the poor are going unmet, that really adds fuel to the fire. So there is a change in consciousness and the situation is gradually improving."

This, of course, is a variation in this context of Jesus' famous "Render Into Caesar" comment.  See Wikipedia entry here.  The full quote is:  "Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's."  Matthew 22:21 (the King James Version of the quote is here; please note on the link that you can use the features on the page to see the entire context of the quote).)

New Study on Shell Corporations for Various Forms of Illegality, Including Tax Evasion (10/27/12)

In a new study, the authors take a close, empirical look at the use of shell corporations to skirt the law.  Michael Findley, Daniel, and Jason Sharman, Global Shell Games: Testing Money Launderers' and Terrorist Financiers' Access to Shell Companies, (9/22/12), here.  Some of the findings of the study have been the subject of speculation.  The study confirms some of the speculation.  One interesting finding is that the countries complaining the loudest about tax haven use of shell companies are some of the biggest abusers.

Of course, we have seen shell corporations and other types of shell entities used with the offshore accounts to give added levels of identity protection.  Use of such entities are deemed particularly egregious by DOJ Tax and the IRS.  Indeed, virtually all of the prosecuted cases involving offshore accounts have involved such shell entities.

So, here are some selected excerpts:

Summary 

For criminals moving large sums of dirty money internationally, there is no better device than an  untraceable shell company. This paper reports the results of an experiment soliciting offers for these prohibited anonymous shell corporations. Our research team impersonated a variety of low- and high-risk customers, including would-be money launderers, corrupt officials, and terrorist financiers when requesting the anonymous companies. Evidence is drawn from more than 7,400 email solicitations to more than 3,700 Corporate Service Providers that make and sell shell companies in 182 countries. The experiment allows us to test whether international rules are actually effective when they mandate that those selling shell companies must collect identity documents from their customers. Shell companies that cannot be traced back to their real owners are one of the most common means for laundering money, giving and receiving bribes, busting sanctions, evading taxes, and financing terrorism.

An Outlier Offshore Account Tax Obstruction Plea (10/26/12)

I have just recently come across the plea agreement in United States v. Robert Edward Cone (SD TX Crim. No. H-11-617), here.  The plea was entered in February; sentencing is set for early next year.  The plea and my personal knowledge of the case (I represented a witness) indicate that, although a foreign account and the Schedule B foreign account question were involved, the case was an outlier to the Government's foreign account initiative.  Hence, I have put the case in spreadsheet with an indication that it is an atypical case.  First the key data and  then I provide a narrative explanation.

Defendant:  Robert Edward Cone
Banks:  Royal Bank of Canada Jersey Islands)
Entities:  Yes (Jomach Limited, a BVI entity)
High Balance:  ? [See below]
FBAR Penalty: ? [See below]
High Balance:  Unknown
Count of Plea:  Tax perjury, Section 7206(1) with 3 year max sentence
Tax Loss:  $282,691 (agreed as "relevant conduct" tax loss because it was a 2001 liability and the plea count of conviction was for 2006)
Restitution: $939,917 (contractual restitution for the year 2001, consisting of the tax, apparently the civil fraud penalty and tax on each).
5K1 Departure Possibility:  No
Court:  SD TX
Judge:  Ewing Werlein (Wikipedia entry here)

Parallel Civil Proceedings and Criminal Proceedings - The Balancing Act (10/12/12)

In United States v. Hines, 2012 U.S. Dist. LEXIS 149713 (ED NY 10/17/12), [will provide a link when I can], the Government sought an injunction against the defendants who it alleged was promoting a fraudulent tax shelter.  An injunction action is a civil suit in which discovery is permitted.  So far, just routine.  But, before discovery was implemented, the Government "advised the court that there is an open criminal investigation of both defendants that is related to the allegations at issue in this action."  The Government nevertheless wanted to take civil discovery.  Consistent with the procedures then applicable in the case, the Government moved to take the discovery it wanted.  The Magistrate Judge granted the motion, contemporaneously denying a stay of the proceeding while the criminal investigation proceeded, but entered the following FRCP Rule 26(c) protective order:

[T]he discovery obtained in this action may be used solely for purposes of this litigation and may not be shown, distributed or disseminated to any other person or otherwise used for any purpose other than for impeachment purposes in another proceeding or in connection with a perjury prosecution arising out of the defendants' deposition testimony. However, the government may use information derived from this action against other individuals or entities in any other proceeding.

The Magistrate Judge thought this was the appropriate balancing of the competing needs for the civil litigation and the defendants' potential Fifth Amendment privilege.

The Government appealed the Protective Order to the district judge.

The district judge started the analysis as follows:

This discovery appeal presents an interesting issue at the intersection of a court's power to issue a protective order prohibiting the use of discovery obtained in a civil litigation in other proceedings, and a party's constitutional right to assert the Fifth Amendment privilege against self-incrimination in a civil enforcement action brought by the government. First, under Federal Rule of Civil Procedure 26(c)(1)(B), a court "may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense" that "specif[ies] terms . . . for the disclosure or discovery." Second, "there is no question that an individual is entitled to invoke the privilege against self-incrimination during a civil proceeding . . . [a]nd this means that a civil litigant may legitimately use the Fifth Amendment to avoid having to answer inquiries during any phase of the discovery process." 4003-4005 5th Ave., 55 F.3d at 82 (citations omitted). If a defendant in a civil proceeding chooses to invoke the Fifth Amendment as a result of an overlapping criminal investigation, such defendant risks an adverse inference from his assertion of the privilege. Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 97-98 (2d Cir. 2012). 

Another Plea Related to Offshore Activity (10/12/12)

Dennis Duban, a Los Angeles accountant, has pled guilty to conspiracy and aiding and assisting.  The DOJ Tax Announcement is here.

Mr. Duban was the accountant who aided and assisted another client commit tax crimes.  The client, Charles Alan Pflueger, previously pled guilty.  See my blog on that plea; Plea for Defendant Charged with Tax Crimes (including FBAR) (5/30/12), here.

As explained in the press release, Mr. Duban apparently got too close to his client, so the conspiracy charge related to that.  In addition, he had has own offshore accounts that he failed to properly report.  I quote the foreign activity portions of the press release below.

Defendant:  Dennis Duban
Plea:  Conspiracy to defraud IRS (1 count) and aiding and assisting (1 count)
Banks:  Wegelin (for his client) and "New Zealand accounts" for Duban
Entities:  Yes (both for Duban and his client)
Tax Loss: at least $1 million (apparently for the client and Duban)
FBAR Penalty:  50% of high balance in his personal accounts

Another UBS Client Sentencing (10/11/12)

Wolfgang Roessell has been sentenced.  I previously blogged his guilty plea:  Another UBS Related Taxpayer Plea Agreement (5/31/12), here.

I don't have all the information from the sentencing, but I cut and paste the core information from the blog on the plea and add information from the reports on the sentencing that I have.  I will try to clean up all this tomorrow and update the spreadsheet.

Defendant:  Wolfgang Roessel
Banks:  UBS, Wegelin, Bank A
Entities:  Yes (Cyan United A)
High Balance:  $11,501,868 (derived from statement that penalty was 50% of high balance)
FBAR Penalty: 5,750,933.99
High Balance:  Derived from penalty - $11,501,868
Count of Plea / Conviction:  Tax perjury, Section 7206(1) with 3 year max sentence
Tax Loss: $312,802.95
5K1 Departure Possibility:  Yes
Sentence: 8 months home confinement and 3 years supervised release
Judge:  Kathleen Williams, SD FL (see Wikipedia entry here)

Information from the Bloomberg report (Ex-UBS Client Roessel Avoids Prison in Offshore Tax Case (Bloomberg 10/11/12), here.

“Mr. Roessel does not claim to be an innocent victim,” his attorney, Lee Stapleton, wrote in an Oct. 9 court filing urging leniency. “While he relied on the advice of Swiss professional bankers, he chose to keep the accounts secret and for many years did not advise his accountant that he had a foreign bank account.”

Petition for Certiorari on Deliberate / Willful Ignorance / Conscious Avoidance / Ostrich Instruction (10/11/12)

The second issue raise in both the Walton and the Brooks petitions for certiorari in United States v. Brooks, 681 F.3d 678 (5th Cir. 2012), here and here, is whether the trial court properly instructed the jury on deliberate ignorance as a substitute for specific intent (knowledge) in a crime where the text requires specific intent (knowledge). The deliberate ignorance concept is also called conscious avoidance, willful ignorance and the ostrich concept (mostly mentioned as the ostrich instruction).

The Walton petition alleges that the instructions given were not consistent with the Supreme Court's approval of the deliberate ignorance concept in Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. ___, 131 S. Ct. 2060 (2011), here.  I previously blogged on Global-Tech in Supreme Court Speaks on Willful Blindness (Federal Tax Crimes Blog 6/2/11), here. Suffice it to say now that, in that civil patent case, the Supreme Court discussed the concept of deliberate ignorance in criminal cases and appeared to bless the application of the doctrine.  Assuming that announcing its blessing in that context (which might make it dicta, albeit influential dicta), the question is what does this concept mean?  (I argue in my text Federal Tax Crimes book (copied at the end of this blog) that ignorance is not specific intent (knowledge), hardly a novel argument since Justice Kennedy in dissent in Global-Tech as well as many others have asserted the same argument.)

Accepting the lay of the land as the Supreme Court has served it up in Global-Tech, the petitions in Brooks ask whether the instructions in Brooks were consistent with what the Supreme Court said about deliberate ignorance and whether the varying court's application of the doctrine should be reconciled so that the standards of criminality are consistent among the Circuits.  I should say in this regard that no court has rejected the concept of deliberate ignorance -- the conflict is over how it is conceptualized and the elements required that the jury must be instructed in some meaningful manner.

Defense Witness Immunity (10/10/12)

It is commonplace that the prosecutors will give immunity to a prosecution witness to overcome the witness's Fifth Amendment privilege and forcing the witness to testify for the Government which, in a criminal case, means against the defendant.  But, the defense has no such tool in order to prevent a defense witness from claiming the Fifth Amendment.  Is this fair?  If not, what can be done about it.

The historical rule has been that the defense has no way to force the granting of immunity in order for the witness to have the incentive or the compulsion to testify over Fifth Amendment claims.  But there are exceptions.

In United States v. Brooks, 681 F.3d 678 (5th Cir. 2012), here, the defendants' requested immunity for a defense witness who refused to testify for the defense.  The prosecutors refused to request immunity under the statute, and the trial court refused to grant immunity.  The Fifth Circuit affirmed the trial court's refusal to grant immunity.  One of the defendants, Walton, seeks certiorari on the issue.  See  petition here.

I introduced other issues in the Brooks case in an earlier blog, A White Collar Crime Case with Issues Relevant to Tax Crimes (Federal Tax Crimes Blog 10/10/12), here.  In this blog, I focus on the defense witness immunity issue.

First, I offer the key excerpts from the Fifth Circuit decision.  Second I offer excerpts from the reasons argued for granting the petition for certiorari in Brooks.  Third, for what it is worth, I offer my discussion from my Federal Tax Crimes book.

A White Collar Crime Case with Issues Relevant to Tax Crimes (10/10/12)

The White Collar Crime Prof Blog has an interesting post on a petition for certiorari filed recently in United States v. Brooks, 681 F.3d 678 (5th Cir. 2012), here.  See Defense Witness Immunity & Global Tech - Important Issues on Cert (White Collar Crime Prof Blog 10/7/12), here.  These issues presented for certiorari arise in many white collar crimes cases, including tax crimes.

In Brooks, allegedly in order to manipulate commodity prices, Defendants, commodity traders with an energy company, provided false information on commodity trades to an trade publication widely used to indicate prices and price movements, thus potentially having a disruptive effect on the markets in those commodities.  They were prosecuted and convicted for false reporting in violation of the Commodities Exchange Act and the federal wire fraud statute.

The Fifth Circuit addressed many issues in affirming their convictions.  I will discuss in separate blogs later the two issues being presented on petition for writ of certiorari.  Those issues are (i) the holding that the Government did not have to grant immunity to witnesses who might be exculpatory to defendant and (ii) the blessing of the deliberate ignorance instruction given to the jury.

I will summarize here the remaining issues in the Fifth Circuit opinion that I think of particular relevance to tax crimes.  Keep in mind that tax crimes are just a subset of white collar crime, so many of the skirmishes in white collar crime cases generally will often appear in tax crimes cases.

1. Government Interference with Payment of Legal Fees.

The defendants alleged that the Government's actions, direct and indirect, caused their employer to withhold attorneys fees for their defense and thereby violated their Fifth and Sixth Amendment privileges.  Defendants relied upon the landmark decision in United States v. Stein, 541 F.3d 130 (2d Cir. 2008), a criminal tax prosecution of tax shelter promoters, where the Second Circuit affirmed dismissal of most of the defendants because the Government had put undue pressure on KPMG to withhold attorneys fees for those defendants.  The Court noted in this regard that the case was distinguishable from Stein because:  "The district court's factual findings bound the Second Circuit, and on such findings, the Second Circuit held KPMG's actions were state actions that violated the defendants' right to counsel of their choice."   No such findings were made in Brooks.