A Third Theory for Conviction in the Larson, Pfaff and Ruble Cases -- Aiding and Abetting / Accomplice Liability

As I noted in an earlier blog titled More on 18 USC § 2(b) Liability from the Larson / Pfaff / Ruble Case, the Government asserted criminal liability for tax evasion directly under 7201 and also asserted liability under 18 USC § 2(b).  Judge Kaplan described these as the first and second theories of criminal liability for evasion. There was a third theory -- aiding and abetting liability -- often called accomplice liability -- under 18 USC § 2(a). Accomplice liability requires that a principal commit the crime; if a defendant aids and abets the actual principal, the accomplice is deemed a principal.

I thought I would offer readers the Judge Kaplan's instructions on accomplice liability (from pp. 5243-5246 of the transcript).

Another Plea for Taxpayer with UBS & Credit Suisse Accounts (3/8/11)

There is another plea for a taxpayer. The DOJ Tax press release is here. The key facts (which may be supplemented as I learn additional key facts) are:

Taxpayer: Edward Gurary
Banks : UBS AG & Credit Suisse
Entities: Yes
Guilt: By Plea Agreement - one count of tax perjury
FBAR penalty: $473,000 (Reportedly 50% of high balance)
Court: ND Ohio
Judge: Polster, Dan

I have updated the spreadsheet.

IRS Memo re Processing OVDI Cases (3/8/11)

On 3/3/11, the IRS Deputy Commissioner for Services and Enforcement issued a memo to guide LB&I and SBSE personnel regarding the application of the penalty framework for the OVDI.  The memo is here.  The guts of the memo is this:

Effective as of the date of this memorandum for all offshore voluntary disclosures received after the close of the 2009 Offshore Voluntary Disclosure Program (2009 OVDP), you are authorized until further notice to execute agreements to resolve the tax liabilities related to offshore issues of taxpayers who make voluntary disclosure requests in the following manner:

Snipes Petition for Certiorari Raises Venue Issues

Wesley Snipes filed a petition for certiorari on 2/28/11. The petition is here.  You will recall that he was convicted of three counts of failure to file. See blog on affirmance, "Wesley Snipes Conviction and Sentence Affirmed ." The questions raised in the petition are:

QUESTIONS PRESENTED

1. Is an accused person deprived of the right under Article III and the Sixth Amendment to be tried only by a jury of the community where venue is proper, when factual questions determinative of whether venue has been correctly laid are determined solely by a jury selected in the place challenged by the defendant as incorrect?

2. Where venue is a contested factual issue in a criminal trial, does the government bear a burden of proof beyond a reasonable doubt or only by a preponderance of the evidence?

More on 18 USC § 2(b) Liability from the Larson / Pfaff / Ruble Case

In yesterday's blog titled "The Conduct Too Remote Is Not Evasion Argument in the Larson & Pfaff Petition for Certiorari," I discussed the application of 18 USC § 2(b) to make an actor guilty as a principal of a crime committed by another who may be entirely innocent in contrast to 18 USC § 2(a) which requires another criminal actor who the defendant aids and abets. The relevant portion of the § 2(b) is:

(b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.

In the indictment, the Government relied upon both direct liability for their conduct under 7201 and upon 18 USC § 2. The instructions make clear that the Government was relying upon 2(b) (although it also relied on 2(a) as I shall note in a later blog). I provide the instructions below and, after doing that, will provide some further discussion of 2(b) liability from a case differentiating the 2(a) and 2(b) concepts.

The Conduct Too Remote Is Not Evasion Argument in the Larson & Pfaff Petition for Certiorari

I write to address, perhaps not in linear fashion, the second question presented in the Larson and Pfaff petition for certiorari (see prior blog here). That question is:

2. Whether for ten of the twelve counts of conviction petitioners’ conduct was too remote from the taxpayers’ returns to be charged under 26 U.S.C. §7201.

The charges in this case were (from the superseding indictment with the names of the dismissed and pleading defendants' names omitted):

Another Sentencing for Taxpayer with UBS Account

There is another sentencing of taxpayer. The DOJ Tax press release is here. The key facts (which may be supplemented as I learn additional key facts) are:

Taxpayer: Arthur Joel Eisenberg
Bank: UBS AG
Entities: Yes
Guilt: By Plea Agreement - one count of tax perjury
Sentence: Incarceration 0; home confinement 0; Probation 3 years
FBAR penalty: $2.1 million (Reportedly 50% of high balance)
Court: WD Washington State
Judge: John Coughenour

I have updated the spreadsheet.

Addendum 3/7/10:  Bill Singer's Street Sweeper Blog (Forbes).

Petitions for Cert in US v. Pfaff, Ruble & Larson

Petitions for certiorari have been filed in the criminal convictions of John Larson, Robert Pfaff and R.J. Ruble in the massive KPMG-related criminal case which drew fame in an earlier iteration (United States v. Stein before 13 defendants were dismissed for prosecutorial abuse). The Second Circuit summary affirmance of the convictions of Larson, Pfaff and Ruble is here. The petition for John Larson and Robert Pfaff is here. The petition for R. J. Ruble is here..

Credit Suisse Advisor / UBS Banker Charged; DOJ Reaches Out to Him (3/3/11)

Christos Bagios another Swiss banker has been charged with the Klein / defraud conspiracy (18 USC 371). Bagios worked serially with UBS AG, UBS Swiss Financial Advisors AG and then with Credit Suisse Private Advisors. The charge was made by complaint.  (The complaint (with affidavit) is here and is posted with the permission of Tax Analysts).  Interesting underlying facts alleged in the affidavit supporting the complaint that, if true, continues to paint a damning, even if predictable, picture for the Swiss banks. The focus of the misconduct alleged relates to Bagios' time with UBS AG and UBS Swiss Financial Advisors AG.

Bagios was arrested earlier. In the hearing on the complaint, the magistrate judge held that there was probable cause to charge Bagios and required a $500,000 corporate surety bond and $150,000 cash bond.

While at UBS, Bagios is alleged to have conspired with Renzo Gadola, who previously pled (see here) and gave incriminating information on Bagios. Kevin Downing is reported to have represented by telephone during the hearing that "Bagios and Gadola worked together in a UBS unit focused on helping American tax evaders." Also reported is that DOJ officials represented that "they had reached out to Bagios to see if he would cooperate with ongoing tax fraud investigations but said he had not responded."

More on Credit Suisse and Its Enablers (3/1/11)

I have previously blogged the recent indictment of 4 Credit Suisse enablers for offshore account skullduggery.  (See "More Enablers Indicted", FTCB (2/23/11).)  According to a Reuters Legal report here:

1. Mr. Agostini, one of the defendants, shifts the focus to Credit Suisse:

"I always acted in the name of the bank and according to their instructions," Agustoni told Reuters via telephone.

"It's not the case that I did anything independently, the bank was always informed and my actions were checked by my bosses," Agustoni said.

Duke Snider Dies: A Great Baseball Player Who Made a Wrong Choice (2/27/11)

The late 1940s and the 1950s were great times for baseball-- at least New York baseball. My brother, my cousin and I were New York baseball fans, although we lived in a small town in South Carolina. "Our" teams were the Giants, the Yankees and the Dodgers, respectively. (I was the youngest of the three, so got the last choice; but, as it turns out the best choice.)

The New York Times reports that the legenday Duke Snider, centerfielder for the Dodgers, has died. This is from the NYT article:

In the 1950’s, the Golden Age of New York baseball, the World Series almost always meant red, white and blue bunting at Ebbets Field, Yankee Stadium or the Polo Grounds. October afternoons provided a national showcase for baseball’s premier center fielders — Snider of the Dodgers, Mickey Mantle of the Yankees and Willie Mays of the Giants.

Barry Bonds Swings at the Obstruction Charge but Doesn't Hit This Time

In United States v. Barry Lamar Bonds, 2011 U.S. Dist. LEXIS 15906 (ND CA 2011), the third superseding indictment charged four counts of false declarations before a grand jury. A fifth count charged

BARRY LAMAR BONDS,

did corruptly influence, obstruct, and impede, and endeavor to corruptly influence, obstruct, and impede, the due administration of justice, by knowingly giving material Grand Jury testimony that was intentionally evasive, false, and misleading, including but not limited to the false statements made by the defendant as charged in Counts One through Four of this Indictment. All in violation of Title 18, United States Code, Section 1503.

In order to assure that there was a unanimous verdict as to guilt, the Government agreed that the jury must be instructed "to agree unanimously as to which statement or statements constitute obstruction of justice." In other words, for example, the six members of the jury could not pick one or more statements for conviction and the other six pick other statements to use for conviction. The jurors would need to agree upon at least one or more actions -- in this case statements -- that constitute obstruction.

Grand Juries Are Not for Trial Preparation After Indictment

The Government properly uses grand juries to investigate and prepare cases for trial. But, what happens if the Government to continue using the indicting grand jury same or even some other grand jury (new or continuing) to tie up the loose ends in the indicted case? Most of us understand instinctively that that is a problem because it circumvents the discovery rules allowed in criminal cases.

This is, of course, not usually even a significant risk in most tax crimes cases. But, in the larger cases it could be an issue.

More enablers indicted

There is a new indictment out today here. The charge is one count of conspiracy. The individuals charged are:

MARCO PARENTI ADAMI,
EMANUEL AGUSTONI,
MICHELE BERGANTINO, and
ROGER SCHAERER,

The banks involved, identified by pseudonyms (I will supplement when/if I learn the bank names ["International Bank" is Credit Suisse]), are (paragraph numbers are to the paragraph numbers in the indictment):

Swiss Announcement that It will Continue to Drag Its Feet, but Marginally Less So (Perhaps), on Double Tax Treaty Administrative Assistance Requests

The Swiss have announced a relaxed, perhaps, interpretation of their Double Tax Agreement ("DTA") Administrative Assistance provisions. The announcement is here. The action was prompted by OECD peer pressure. Basically, the Swiss signal tax cheats (and other criminals who desire, shall we say, discretion) that the Swiss will generally only respond to administrative requests only when the depositor and the financial institution is named in the request.  Often, as in the UBS / U.S. recent spat, the requesting treaty partner will not know the names of the depositors, so the general requirement that the requesting treaty partner name names -- generally -- means that the Swiss can continue to offer secrecy -- generally.

The "Slight Evidence" and Similar Formulations for Connection to a Conspiracy (2/19/11)

In our Tax Fraud and Money Laundering Class last Monday, Larry Campagna and I addressed conspiracy under Title 18 USC § 371. We covered the key concepts for conspiracy, including the differences between the offense and the defraud / Klein conspiracy. In addressing conspiracy concepts common to both types of conspiracies, we cautioned the class about this comment in the text we use (our own, so this is mea culpa):

Although the Government must prove that a defendant was a member of a conspiracy, this requirement may be satisfied by a showing of only a “slight connection” to the conspiracy so long as the connection is proven beyond a reasonable doubt.

Real World Dynamics -- the Cheek Good Faith Belief Defense

In United States v. Mostler, 2011 U.S. App. LEXIS (3d Cir. 2/11/11), an nonprecedential decision, the Court offers some real world dynamics on the presentation of this defense to the jury.

The defendant asserted the Cheek good faith belief defense. The Court of Appeals noted that, prior to embarking on a course of nonpayment of tax, the defendant did some "additional research" "largely conducted on the internet." The defendant quit paying his taxes . (The Court of Appeals decision talks in terms of nonpayment, but it is unclear whether the nonpayment resulted from (i) failure to report / file or (ii) filing returns without paying the taxes reported due or (iii) filing fraudulent returns failing to report the taxes due.) In any event, he was charged with four counts of tax evasion (apparently evasion of payment because of the courts other descriptions). His "sole defense" was that he had not willfully violated the law.

TRAC November Statistics

TRAC has November statistics for prosecutions and convictions of interest to readers of this blog:

Prosecutions on cases referred by IRS

Convictions on cases referred by IRS

White collar crime prosecutions

White collar crime convictions