Lesser Included Offense to Rescue a Conviction After Confusion of Liability as Aider and Abetter or Causer

I have recently had several blogs arising from the Larson and Pfaff petition relating to the concepts of aider and abetter liability and causer liability under 18 USC §§ 002(a) and (b), respectively.  (To review those, click on the labels below.) Contemporaneously, in the Tax Fraud and Money Laundering class that Larry Campagna and I teach at the University of Houston Law School, we recently covered the lesser included offense concept.  So, I  present today one case where these concepts came together.  I think it nicely illustrates the lesser included offence concept in a nontraditional setting where it is used to save a conviction after the prosecution blurred the roles of the two types of liability under 18 USC § 2.

In United States v. Motley, 940 F.2d 1079, 1082 (7th Cir. 1991), the defendant, an income tax preparer who prepared false returns, had been charged and convicted under 18 U.S.C. §§ 287 and 2(a). The court held that the defendant was not guilty of aiding and abetting under subsection § 2(a) under which he was tried because the Government failed to prove the taxpayers committed the underlying crime. The Seventh Circuit refused to allow the Government to switch on appeal to subsection § 2(b), causer liability, which does not have the element of requiring that there be one or more other persons guilty of the underlying crime. But, the Seventh Circuit saved the day for the Government by holding the defendant liable for the lesser included offense of § 7206(2) which did not have the element requiring that another person (here the taxpayers) be guilty of the crime. The Court reasoned after giving the taxpayer his accomplice victory:
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Sometimes the Guilty are Really Guilty, But Not These If You Believe Their Lawyer (Whom the Jury Did Not)

Yesterday, two defendants caught up in the foreign bank account initiative were convicted in the Southern District of Florida, which seems to be the center of the center of activity in this initiative. The Bloomberg report is here, and is reasonably comprehensive for a quick report of the conviction yesterday.

As narrated in the Bloomberg article, the defendants' lawyer proclaimed their innocence. (The article says that the lawyer was "their defense lawyer;" it is unclear to me how any judge would permit one lawyer to represent more than one defendant in a criminal trial.) Thus, it would seem, the defense presentation foreclosed any possibility of seeking a downward adjustment for acceptance of responsibility. As I note in my book:

In tax cases, this adjustment is generally achieved by a plea agreement and acceptance of responsibility sufficiently before the trial date that significant resources are avoided. The Application Note [to SG 3.1.1 provides (and cautions):

3. Entry of a plea of guilty prior to the commencement of trial combined with truthfully admitting the conduct comprising the offense of conviction, and truthfully admitting or not falsely denying any additional relevant conduct for which he is accountable under §1B1.3 (Relevant Conduct) (see Application Note 1(a)), will constitute significant evidence of acceptance of responsibility for the purposes of subsection (a). However, this evidence may be outweighed by conduct of the defendant that is inconsistent with such acceptance of responsibility. A defendant who enters a guilty plea is not entitled to an adjustment under this section as a matter of right.

By the same token, the Guidelines recognize the possibility that a defendant may qualify for this favorable acceptance of responsibility downward adjustment even though not pleading guilty. In “rare situations” a defendant may demonstrate acceptance of responsibility “even though he exercises his constitutional right to a trial,” as “where a defendant goes to trial to assert and preserve issues that do not relate to factual guilt.” [SG 3E1.1, cmt. Note 2.]

Judge Posner Addresses Double Jeopardy and Sentencing Financial Loss Calculations

In United States v. Peel, 595_F.3d 763 (7th Cir. 2010), Judge Posner addresses a variation of the double jeopardy issue in a nontax case. I address Peel in this blog because variations of the double jeopardy theme do arise in tax cases. I discuss my notions on the related themes -- lesser-included offense and merger -- in my text, but here devote the discussion to Judge Posner's decision in Peel.

The defendant was convicted of bankruptcy fraud and of obstruction of justice arising out of the same conduct. Unhappy with that result, the defendant argued on appeal that "to convict him of both violated the double jeopardy clause of the Fifth Amendment, because one offense is included in the other." Double jeopardy is most often encountered in successive trial situations, but, as Judge Posner noted, "with respect to cumulative sentences imposed in a single trial, the Double Jeopardy Clause prevents the sentencing court from prescribing greater punishment than the legislature intended." (Internal quotes and marks omitted.) Judge Posner reasoned that the dual charges here did violate the double jeopardy prohibition. His reasoning (stripped of quotes and case citations) is:

The test for whether there are two offenses or only one, is whether each provision requires proof of a fact which the other does not. The test was flunked here because convicting Peel of obstruction of justice did not require proof of any fact that didn't have to be proved to convict him of bankruptcy fraud. It was thus a lesser-included offense of bankruptcy fraud and the Blockburger test makes clear, and many cases hold, that to punish a person for a lesser-included offense as well as the "including" offense is double jeopardy unless Congress intended the double punishment. The government does not argue that Congress intended that.

This is like a case in which a person is tried for both murder and attempted murder. The elements are different, but since conviction for murder automatically convicts the defendant of attempted murder (for there can be no murder without attempting the deed), the defendant cannot be convicted of both crimes. There is an exception for cases in which the defendant was convicted of the lesser-included offense before he could have been prosecuted for the greater one, as when the defendant is convicted of attempted murder and later his victim dies. In such a case he can be tried for murder. The exception has no application to this case, which must therefore be remanded with directions that the judge vacate one of the two convictions.

Having concluded that there was a double jeopardy violation, the Court then addressed the murkier and unsettled issue of which of the two convictions should be vacated. You can sense Judge Posner's mind at work in his analysis of that issue (stripped of quotes and case citations):

The defendant argues that his conviction for obstruction of justice is the one that should be vacated, even though it carries the higher statutory maximum sentence, because it is a lesser-included offense of bankruptcy fraud. It is lesser in the sense of having fewer elements, because one can commit obstruction of justice without committing bankruptcy fraud but not bankruptcy fraud without committing obstruction of justice. That is the only sense of "lesser" that matters under the Blockburger test: that offense A has elements a, b, c, and offense B has elements a, b, c, and d, so that conviction of B automatically convicts the defendant of A as well. The remedy is to eliminate the doubleness. But which conviction must be vacated is not dictated by the Constitution. It is a matter committed to the trial judge's discretion because functionally it is a decision concerning the length of the defendant's sentence. But usually it's the conviction carrying the lesser penalty that is vacated. As we noted in Lanier, it would be paradoxical to give the defendant a shorter sentence than he would have received had the government not also charged him with the less serious offense.

What is true is that in a case in which the lesser-included offense has fewer elements and is the less serious offense, vacating the sentence for the graver offense would be an abuse of discretion: imagine convicting a person of attempted murder and of murder and punishing him only for the attempt. This is not such a case; the lesser-included offense of obstruction of justice is the graver offense.

With that, the Court remanded the issue of which crime to vacate to the sound discretion of the district court.

In addition to addressing the double jeopardy issue, Judge Posner also held that, for sentencing purposes, the financial loss attributable to a future stream of payments may be discounted to current value in determining the base offense level.  Presumably the same analysis would apply in tax cases if the tax loss amount includes future intended tax losses.