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District Court Rejects Motions for Acquittal and New Trial on Tax Perjury Convictions (6/29/22)

In United States v. Thompson, No. 21-cr-00279-1, 2022
U.S. Dist. LEXIS 99469 (N.D. Ill. June 3, 2022), CL here,
the court denied Thompson’s motions for acquittal and, in the alternative, a new
trial. Thompson had been convicted of “two counts of making a false
statement with the intent to influence the Federal Deposit Insurance
Corporation (the FDIC) and a mortgage lending business, in violation of 18
U.S.C. § 1014, and five counts of filing a false tax return, in [*2]  violation of 26 U.S.C. § 7206(1).”

I focus on certain tax aspects of the opinion, although I
note that the court held (Slip Op. 28-38) that, for the § 1014 conviction in
the Seventh Circuit, literal falsity was not required. 

Special Agents Assisting the Grand Jury Make Surprise
Visit.

As often happens in a tax investigation, IRS CI Special Agents make
a surprise early morning visit, which is often the target’s or subject’s first
indication of the investigation, designed to catch him or her off-guard and,
even when given the modified Miranda warnings, more amenable to an interview
without counsel. Here is the court’s description of that interview. In this
case, the Special Agents were, respectively FDIC and IRS Special agents, and were assistants to a grand jury rather than agents conducting agency
administrative investigations.

             At 8:15
a.m. on December 3, 2018, Evans [Special Agent with the FDIC Office of
Inspector General] and Special Agent Jason Gibson (Gibson), [*13]  with IRS Criminal Investigation, visited
Thompson at his house unannounced to interview him. Tr. 935:16-936:4,
944:12-19. Evans testified that, during the interview, they discussed Thompson’s
loan at Washington Federal, Evans and Gibson asked him questions about the
loan, and Thompson provided information about the loan. Tr. 938:16-25.
Specifically, Evans told Thompson that he was investigating Washington
Federal, but he never told Thompson that Thompson himself was the subject of an
investigation or that Thompson’s taxes or tax deductions were the subject of an
investigation.
Tr. 950:23-951:8. At some point during or at the end of the
interview, Gibson served Thompson with a grand jury subpoena that called for
Thompson to appear and provide records, including but not limited to federal
tax records and records used to prepare federal tax returns, loan and credit
applications, records related to the purchase of Thompson’s primary residence,
his rental residence, and a third property located in Michigan. Tr. 939:1-22,
941:9-942:6, 948:19-22; GX 411.

I infer that, although not expressly stated, Thompson was at least a subject of the grand jury investigation. The opinion does not state
whether he was given modified noncustodial Miranda warnings or whether Thompson
made incriminating admissions during the interview. I have to assume that
defense counsel made whatever he could from the described event.

 Denial of Good Faith Jury Instruction for Tax Perjury.

 The court addressed this issue (Slip Op. 79-81):

            In cursory
fashion, Thompson argues that the Court erred by failing to give Thompson’s
requested good faith jury instruction relating to the tax charges. Mot.
Post-Trial at 25 (citing R. 135). Before trial, Thompson requested that the
Court give a good faith instruction to the jury stating that, if Defendant
believed in good faith that he was acting within the law, he did not make a
false statement on a tax return as charged in Counts III through VII. R. 56.
The Court deferred ruling [*80]  until
trial, and after the close of evidence, the Court declined to give Thompson’s
proffered good faith instruction. R. 135, Jury Instruction Order at 1-2. The
Court agreed with the Government that the instruction was not mandated by Cheek
v. United States, 498 U.S. 192, 201, 111 S. Ct. 604, 112 L. Ed. 2d 617 (1991),
and that, based on the evidence introduced at trial, Thompson’s proffered good
faith instruction was not warranted. Id. at 1. The Court instructed the jury as
to the definition of willfulness. Tr. 1327:8-22 (instructing jury that to find
Thompson guilty of Counts III through VII, the jury must find that Thompson
acted willfully, meaning that “he knew he had a legal duty to file a
truthful tax return, but when he signed the return, he did not believe it was
truthful as to a material matter”).

            The Seventh
Circuit has held that the good faith instruction is not required when the jury
is instructed on willfulness and evidence did not support the instruction.
Resp. at 25 (citing United States v. Kokenis, 662 F.3d 919, 929-30 (7th
Cir. 2011) (willfulness instruction “necessarily encompassed the defense
theory of good faith” as the “jury could not find both that
[defendant] acted willfully as defined in the instructions and that he acted in
good faith”) (emphasis in original)). As the Court stated in its previous
Order, [*81]  no evidence was presented
that Thompson did not know the law or that he misunderstood the law. Jury
Instruction Order at 1-2. As a result, the Court finds that a new trial is not
warranted based on the Court’s refusal to give Thompson’s proffered good faith
instruction.

Apparently Thompson did not testify (see Slip Op. 72 n 17). 

 Although, as I have noted, it is wrong that a good faith
defense requires a defendant to testify, the question here is and under what
circumstances a defendant is entitled to a good faith jury instruction in
addition to the standard Cheek willfulness instruction. To be sure, with
just the standard Cheek willfulness instruction, a jury believing the
defendant acted in good faith is unlikely to convict. Still, when is a specific
good faith instruction in addition to the standard Cheek willfulness
instruction required or, if not required, prudent in the trial court’s
discretion?

I think that, even when the defendant does not testify,
there must be some evidence which, if believed by the jury, indicates that the
defendant acted in good faith.

I will just refer readers to some of the more important blogs
on variations of this issue (in reverse chronological order):

  • Fifth Circuit Sustains Convictions Despite Trial Judge’s
    Refusal to Give Proper Cheek Willfulness Instruction
    (Federal Tax Crimes
    Blog 11/21/15; 11/22/15), here.
  • Good Opinion on Error in Not Giving Requested Good Faith
    Belief Instructions
    (Federal Tax Crimes Blog 3/29/14), here.
  • Fourth Circuit Reverses Tax Obstruction Conviction
    Because of Bad Instruction and Affirms Denial of Good Faith Instruction for
    False Claim Conviction
    (Federal Tax Crimes Blog 11/20/13), here.
  • Good Faith as a Defense to Tax Crimes (Federal Tax
    Crimes Blog 2/9/13), here.
  • Jury Instructions in Tax Obstruction and Klein Conspiracy
    Case
    (Federal Tax Crimes Blog 2/6/13), here.
  • Making a Cheek Good Faith “Defense” Without
    Testifying
    (Federal Tax Crimes Blog 11/24/11), here.
  • Sixth Circuit on Klein Conspiracy and Tax Evasion (Federal
    Tax Crimes Blog 9/16/10), here.
  • Willfulness and Good Faith Defense – an Oxymoron? (Federal
    Tax Crimes Blog 12/29/09), here.

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