Wednesday, September 15, 2021

Prosecution IRS Agent’s Contact with Defense Expert Without Defense Counsel

 Staff at the nation's domestic spy agency are working overtime to reduce long waits for officials needing high-level security  

ASIO staff are working overtime as public servants wait for clearance to handle top secret information

The agency overseeing the public service published the guidance on Thursday, warning of the "high risks" of overseas travel for public servants during the pandemic.

The Australian Tax Office stopped or identified more than $1 billion in questionable payments under the federal government’s JobKeeper wage subsidy program, saying the level of wrongful claims under the massive scheme was “extremely low”.

Tax office stops more than $1b wrongly flowing out of JobKeeper

This Tax Insights provides our initial insights and observations on the ATO's Interim Top 500 Findings Report.

ATO won’t pursue $180m in jobkeeper paid to ineligible businesses due to ‘honest mistakes’

Freedom of information? Data reveals FOI legal disputes are on the rise

The Morrison government is doing its best to keep Australians in the dark, forcing them to go to court to find out what's being done in their name.

Rex Patrick - The Federal #FOI system has been sabotaged with ’s ministers and bureaucrats directing applications into procedural purgatory. They hate #transparency. I’m taking more legal action to help fix this. It’ll be another big fight. #auspol

Tony Harris: Parliament does its job

Minority governments allow Australians to see Parliament return to its proper place in the political system.

Government ascendency over federal parliaments has been so extensive and persistent that many thought this was the norm. Only now with a minority government can we observe the federal Parliament working as it is meant to.

Ministers are not able to abuse power because they do not have it –to push legislation through with little scrutiny, to determine when and how matters will be considered and when Parliament will rise. Government is less prone to lecture and more inclined to persuade. Non-government members have a better chance to advance ideas and to propose legislation. These are positive developments.

But we have yet to see the full potential of the House of Representatives. It took senator Nick Xenophon  to show lower house independents how to overcome government paranoia about publishing information from the national broadband network business case

PM’s culture of creeping secrecy: how a flight to Sydney confirmed his aversion to disclosure

In Rodgers v. United States,   (9th Cir. 7/6/21), CA9 here (unpublished and nonprecedential), the Court held (based on a prior appeal) that the return preparer penalty under § 6694(b)(2)(A) for a “willful attempt in any manner to understate the liability for tax on the return or claim” requires “specific intent to understate tax liability on tax returns or claims.”  Basically, the panel held, the civil penalty requires the same level of intent as § 7206, which is the Cheek-type of intent – specific intent to violate a known legal duty.  (The panel opinion does not cite Cheek, but that is the way I read the opinion.)

The opinion is nonprecedential because, as interpreted by the panel, the Ninth Circuit’s precedent compelled the conclusion.  Accordingly, the panel reversed because the district court held that willful blindness satisfied the test of willfulness.

Prosecution IRS Agent’s Contact with Defense Expert Without Defense Counsel

In United States v. Shun, 2021 U.S. Dist. LEXIS 161023 (W.D.N.Y. Aug. 25, 2021), Cl here, in a tax crimes prosecution (conspiracy and tax perjury), one of the questions discussed in the opinion is whether an attempt by IRS CI agents assisting the prosecutor in the case to interview an expert designated by the defense was a violation of the defendant’s Sixth Amendment right to counsel.  The discussion is short but instructive, so I just cut and paste (Slip Op. pp. 4-7): 

Shun's Motion for Relief Based on Violations of her Sixth Amendment Rights

   On July 22, 2021, IRS Criminal Investigation Division Special Agent Scott Simmons, together with another IRS special agent, visited the offices of Freed Maxick CPAs, P.C. and attempted to interview Certified Public Accountant Richard Wright, who had previously been identified by Shun as a potential expert witness for the defense in this case. (Dkt. No. 186) Wright was not present at the Freed Maxick office when Simmons and the other agent arrived. (Id.) The agents spoke with another employee of the accounting firm and requested that the employee instruct Wright to call the agents when he returned. (Id.) Wright called later that same day and spoke with Simmons and the other agent briefly on speaker phone. (Id.) Agent Simmons asked Wright some questions and inquired about documents pertaining to the case. (Id.) Wright informed Simmons that he believed defense counsel should be present for their communications and terminated the call. (Id.)

Defendant Shun contends that Agent Simmons' contact with Wright was a "willful and deliberate attempt to interfere with the effectiveness of her defense" in violation of her Sixth Amendment right to counsel. (Dkt. No. 186) Defendant requests various remedies because of this alleged violation, including that the Court: (1) order the Government to produce information about the nature and purpose of Agent Simmons' visit to Freed Maxick and telephone conversation with Wright; (2) deem the income tax principles to which Wright is anticipated to testify about at trial as "accepted" for purposes of the trial and prohibit the Government from offering contradictory testimony; and (3) grant additional sanctions in the form of fees and reimbursements to defendant. (Id.)

            In response to defendant's motion, the Government submits an affidavit from IRS Special Agent Simmons. (Dkt. No. 194-1) Therein, Simmons states that on July 22, 2021, he and another agent attempted to interview Wright regarding this case. (Id. at ¶¶2-3) Simmons wanted to know whether Wright was aware of the upcoming trial date in this matter and if Wright had knowledge of any discoverable documents. n2 (Id. at ¶3) Simmons avers that he knew he could not request any attorney work-product or privileged materials from Wright, and that he had no intention of making such requests. (Id. at ¶¶3, 11) During the call, Wright informed Simmons he was working with Shun's defense counsel, who had asked Wright to testify at trial about various provisions of the Internal Revenue Code. (Id. at ¶10) Simmons asked Wright if he reviewed any records or prepared any documents and Wright stated he had not. (Id. at ¶11) Wright also told Simmons that he had not received a trial subpoena. (Id. at ¶9) Agent Simmons affirmed that his telephone conversation with Wright lasted approximately three minutes. (Id. at ¶7) During oral argument of the motion, counsel for the Government further represented that the conversation between Wright and Simmons lasted only about three minutes, and that no privileged or confidential material was exchanged between them. (Dkt. No. 207, pg. 10) Counsel for the Government also represented to the Court and defense counsel that no information or documents obtained as a result of the phone call would be offered at trial, nor would the Government be relying on, or introducing at trial, any statements made by Wright to Agent Simmons during the call. (Id.)
   n1 The Superseding Indictment also charged Shen with Subscribing to a False Tax Return on April 23, 2010. (Dkt. No. 33, Count 3) On March 15, 2019, the Government moved to dismiss this Count and strike the first reference to Shen in Paragraph 21 of Count 1 of the Superseding Indictment. (Dkt. No. 77) The Court granted the Government's motion and issued an Order of Dismissal on March 18, 2019. (Dkt. No. 78)
   n2 Agent Simmons further affirmed that had Wright been in possession of discoverable documents, he would not have requested the documents directly from Wright, but instead would have contacted counsel for the Government and advised counsel to obtain the documents through discovery. (Id. at ¶3)

            The Second Circuit has instructed that counsel for all parties have a right to interview an adverse party's witness, provided that the witness is willing, without either the presence or consent of opposing counsel and without a transcript being made. International Business Machines Corp. v. Edelstein, 526 F.2d 37, 42 (2d Cir. 1975). Such interviews are permitted because "[a] criminal trial is a quest for the truth [and] [t]hat quest will more often be successful if both sides have an equal opportunity to interview the persons who have the information from which the truth may be determined." Id. See also United States v. Carrigan, 804 F.2d 599, 603 (10th Cir. 1986) ("[W]itnesses in a criminal prosecution belong to no one, and .... subject to the witness' right to refuse to be interviewed, both sides have the right to interview witnesses before trial."); United States v. Hyatt, 565 F.2d 229, 232 (2d Cir. 1977) ("[W]e shall not tolerate the view that the government [or any other party] has some special right or privilege to control access to trial witnesses.").

            Because the Government is permitted to interview willing defense witnesses in a criminal case, Agent Simmons' communications with Richard Wright, defendant's anticipated expert witness at trial, were neither inappropriate nor unlawful. Further, even if Agent Simmons had been prohibited from speaking with Wright, which he was not, it is apparent that no harm to defendant Shun arose from the contact. The conversation between Wright and the agents lasted approximately three minutes and the record reflects that no substantive information about either the facts of the case or Wright's anticipated testimony was discussed. Agent Simmons has affirmed, under oath, that he did not request any privileged information or attorney work-product information, and that no documents were shared or exchanged. Likewise, counsel for the Government represented to both the Court and defendant that no information or documents were obtained during the phone conversation between Wright and Simmons, or as a result of the conversation, that the Government will seek to use at trial. See United States v. Greber, 760 F.2d 68 (3d Cir. 1985) ("We find no merit in the defendant's complaint that an F.B.I. agent interviewed a potential expert witness for the defense before trial...defendant has demonstrated neither impropriety nor injury[.]"). n3
   n3 In response to the Government's statement that no information or documents were obtained during the meeting that would be used at trial, defense counsel responded that if "there was no other purpose to the contact other than to prepare for trial or this case...[i]f that's the case, then we're fine with it." (Dkt. No. 207, pg. 10) Counsel further stated "[i]f there is no use of it at trial, then we're satisfied at that stage that there's going to be no consequence." (Id.) Thus, defense counsel seems to conceded (sic) that no harm arose from the contact.

            For these reasons, the Court finds no violation of defendant Shun's Sixth Amendment right to effective assistance of counsel as a result of the agent's interview of a defense witness, and all relief Shun seeks based on these allegations is denied.

JAT Comments:  

1.  Most attorneys would know that they should not talk to an IRS CI agent who just shows up for an interview.  It is common practice early an IRS criminal investigation for IRS CI agents to show up at the target's residence or sometimes even office unannounced to catch the target off-guard for an interview in which the target might make damaging admissions. For that reason, attorneys representing potential targets advise the potential targets to decline respectfully to engage in discussing anything when such a cold-call is made on them.

2.  A similar genre of problem appears for witness interviews.  Good defense counsel will advise potential witnesses (including even their own expert witnesses) that a Government investigator may contact them without any advance notice to defense counsel.  Defense counsel should be careful to not discourage the witness from talking with the investigator, so as to not open up defense counsel to an obstruction investigation or charge.  But counsel can advise witnesses that, if they wish, they can have defense counsel present for the interview so long as it is a voluntary interview and not under legal compulsion (by, e.g., IRS summons which should not be used in a criminal prosecution but can be used in an IRS CI administrative investigation before referral to DOJ Tax.  The expert witness in Shun did the right thing by declining to be interviewed without defense counsel present.  

3.  The IRS agent apparently recognized that there was some sensitivity about the contact.  It is not entirely clear to me whether this type of contact of defense expert witnesses is a normal practice for IRS CI Agents assisting the prosecutor.