Conscious Avoidance / Deliberate Ignorance -- Assuming the Jury Acted Properly (6/23/11)

In United States v. Hillman, ___ F. 3d. ___, 2011 U.S. App. LEXIS 11962 (10th Cir. 2011), the defendant was "convicted of several crimes arising from a scheme to steal hundreds of thousands of dollars from an insurance company for which he worked." The counts of conviction were: "one count of conspiracy to engage in money laundering (18 U.S.C. § 1956(h)), five counts of money laundering (18 U.S.C. §§ 1957(a) & 2), and one count of false statements to a federal law enforcement agent (18 U.S.C. § 1001(a)(2))." The false statements were made to an IRS Agent.

The defendant raised several issues on appeal, but I focus on the deliberate ignorance issue. I have previously written about deliberate ignorance, which goes by several different names such as conscious avoidance etc. See prior blogs here.

The jury was properly instructed that it could convict based on defendant's own knowledge. The judge also instructed the jury that deliberate ignorance would suffice to establish the knowledge requirement. The jury returned a general verdict of guilty on each count. Defendant complained on appeal that the trial court should not have instructed the jury on deliberate ignorance. You will recall that all courts say that the deliberate ignorance instruction is to be rarely used, but sustain its use in appropriate cases. The defendant's point was that it was inappropriately used in this case and that, if so, the guilty verdict should be reversed because it could have been based on the inappropriate instruction.
Read more »

Supreme Court Speaks on Willful Blindness (6/2/11)

In Global Tech Appliances, Inc. v. SEB, ___ U.S. ___ (6/1/11), the Supreme Court spoke on willful blindness as meeting a statutory requirement of knowledge.  (The concept goes by several names; I have used "conscious avoidance" for the concept in several entries in this blog.)  The Court addressed the concept in a civil patent infringement case where the statute required that the party know that the induced acts constituted patent infringement.  The part on willful blindness in a criminal context is short, so I quote it in full (Slip Op 10-12):

The doctrine of willful blindness is well established in criminal law. Many criminal statutes require proof that a defendant acted knowingly or willfully, and courts applying the doctrine of willful blindness hold that defendants cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances. The traditional rationale for this doctrine is that defendants who behave in this manner are just as culpable as those who have actual knowledge. Edwards, The Criminal Degrees of Knowledge, 17 Mod. L. Rev. 294, 302 (1954)(hereinafter Edwards) (observing on the basis of English authorities that “up to the present day, no real doubt has been cast on the proposition that [willful blindness] is as culpable as actual knowledge”). It is also said that persons who know enough to blind themselves to direct proof of critical facts in effect have actual knowledge of those facts. See United States v. Jewell, 532 F. 2d 697, 700 (CA9 1976) (en banc).

Read more »

Fourth Circuit Speaks Again on Conscious Avoidance / Willful Blindness (5/12/11)

In United States v. Poole, 640 F.3d 114 (4th Cir. 2011), the court addressed the concept of "willful blindness," also called by similar names, such as conscious avoidance, deliberate ignorance, etc. For prior blogs on the concept, see here. I start with basic concept of willfulness.

Conviction of most tax crimes, including the Section 7206(1) aiding and assisting involved in Poole, requires that the Government prove that the defendant acted willfully. Willfulness in this context is the “voluntary, intentional violation of a known legal duty.” United States v. Pomponio, 429 U.S. 10, 13 (1976).  (This statement of willfulness is sometimes referred to as Cheek willfulness because the Supreme Court reiterated the standard in Cheek v. United States, 498 U.S. 192 (1991).  In Bryan v. United States, 524 U.S. 184 (1998), the Court said that this meaning of willfulness requires that the "Government prove that the defendant acted with knowledge that his conduct was unlawful” (quoting Ratzlaf v. United States, 510 U.S. 135, 137 (1994)). (Bryan also held "In certain cases involving willful violations of the tax laws, we have concluded that the jury must find that the defendant was aware of the specific provision of the tax code that he was charged with violating" (citing Cheek), but that formulation was probably overexuberance for the concept of willfulness; I'll just stick here with intentional violation of a known legal duty as the test.)
Read more »

Judge Pauley Continues to Impress - the Conscious Avoidance Instruction (5/13/11)

I have given Judge Pauley kudos in his distillation of the issues the jury should resolve in the context of tax evasion and the prosecutors' "various theories" to slam the defendants into the slammer even where the gravamen of the case -- tax evasion -- would not support their guilt.  I write again on his rejection of the proscutors' attempt to find another way to confuse the jury into a guilty verdict that might not be obtained with a clear focus on the defendants' criminal culpability in the Daugerdas case. 

The Government frequently trots out the conscious avoidance instruction (also known as the ostrich instruction, the deliberate ignorance instruction, and so forth) as yet another way the jury can find the defendant(s) guilty where the Government has not proved that the defendant(s) intentionally violated a known legal duty.   I have previously written on this subject here.  I quote judge Posner in those previous blogs for how the instruction can be misleading.  Here is what Judge Pauley had to say about it in the context of the Daugerdas case -- prosecution of tax shelter promoters with innocent taxpayers:

With respect to the conscious avoidance charge, this Court declines to give the jury such a charge. A conscious avoidance charge requires a factual predicate that "the evidence is such that a rational juror may reach the conclusion beyond a reasonable doubt that the defendant was aware of a high probability of the fact in dispute and consciously avoided confirming that fact." United States v. Ferranini, 219 F.3d 145 at 155 (2d Cir. 2000).

Read more »

Willfulness - Non Tax Contexts

I have written on the willfulness element for most federal tax crimes previously. Yesterday, I read on the White Collar Crime Prof blog here a discussion of a recent Second Circuit case, United States v. Kaiser, ___ F.3d ___ (2d Cir. 2010), discussing the willfulness requirement a securities crime. Willfulness of course means different things in different criminal statutes (see the excerpts from my Federal Tax Crimes book here). Perhaps I confuse more than I help for readers of this blog, but I will provide a few comments on Kaiser.

The fight on appeal was whether the securities crime with a willfulness element required that the Government prove that the defendant knew his conduct was illegal or just that the Government prove that the defendant knew the conduct was wrongful. A person generally knows when he tells a lie that it is wrongful (I set aside the philosophical debate as to whether a lie is always wrongful); what he or she may not know in the specific context is whether the law describes that wrongful conduct (the lie) as a crime. Bottom-line, the court held that the Government need only prove that the defendant know that the conduct -- the lie -- is wrongful. The court summarized its holding:

[W]e conclude that [the prior cases] do not require a showing that a defendant had awareness of the general unlawfulness of his conduct, but rather, that he had an awareness of the general wrongfulness of his conduct.

The opinion is more nuanced than that, so I refer you to it.

One of the interesting points in the decision is the discussion of a specific wrinkle in the securities law is Section 78ff(a) which says: "[N]o person shall be subject to imprisonment under this section for the violation of any rule or regulation if he proves that he had no knowledge of such rule or regulation." So pronounced the court, this does not mean that, in order to convict, the Government must prove knowledge of illegality; it just means that the convicted defendant cannot be imprisoned unless he knew of the illegality. The court talked about this as a "defense" to incarceration, but presumably in a criminal case, the Government must prove the key fact (knowledge of illegality) beyond a reasonable doubt.  I found this wrinkle odd, but securities law is not my area of practice.  But, as suggested by the excerpts from my book, this additional required element for imprisonment seems to be incorporated in the willfulness element for tax crimes.  (I do caution that there may be some continuing uncertainty about the level of knowledge of the illegality, such as does the defendant really have to know the specific law he is violating?)

The Second Circuit's decision also has a good, succinct discussion of Second Circuit law on the conscious avoidance instruction. (For my earlier blog comments on this instruction, see here.)

Conscious Avoidance - The Concept

The confluence of three events moved me to put some material on the blog about the legal concept conscious avoidance. Briefly stated, the concept permits conviction for crimes, such as tax crimes, requiring specific intent to violate a known legal duty if the defendant consciously chose not to know his or her legal duty. This may seem contradictory, but stick with me on this.

First the events that led me here today:

1. I was reading an article two days ago that led me to the following quote from Upton Sinclair: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

2. Yesterday, I listened to a presentation on the Forum Network by John Cassidy on his recent book titled How Markets Fail: The Logic of Economic Calamaties (Farrar, Straus and Giroux: Nov. 10, 2009).

3. Third I reviewed some articles (New York Times version here) on the testimony yesterday by Charles Prince and Robert Rubin, top executives of Citibank, dealing with the phenomenon of how these very smart, highly compensated people at the top failed to manage the risks that very smart, highly compensated people should have managed but did not because, perhaps (and some might say, probably), their compensation depended upon their ignorance or avoidance of conscioiusness of the risks. (Note that Cassidy deals with that phenomenon in respect to Prince and Rubin at Citibank.)

All of this led me back to the issue the concept of conscious avoidance. I therefore updated my materials from my Federal Tax Crimes book and am posting here the updated section on conscious avoidance. Most experienced practitioners know this stuff instinctively, but students and new practitioners might find something useful in the posted section.