Source: http://federaltaxcrimes.blogspot.com/2016/04/former-tax-court-judge-kroupa.html
Timestamp: 2019-04-20 14:35:07+00:00

Document:
Further on willfulness, some of the crimes charged in the indictment do not have a specific willfulness textual element. Specifically, the indictment charges the defraud/Klein conspiracy, 18 USC § 371 and tax obstruction, § 7212(a). Neither have a specific textual requirement that the defendant act willfully. I will discuss that issue in discussing each of the crimes, but I will state now that I believe that each of those crimes have textual elements that as interpreted and applied in tax crimes cases are basically the same as willfulness. There is a lot behind that statement and I just don't have time to develop it here.
COUNT 1 (Conspiracy to Defraud the United States) 18 U.S.C. § 371.
unlawfully, knowingly, voluntarily, and intentionally combine, conspire, confederate, and agree with each other to defraud the United States for the purpose of impeding, impairing, obstructing, and defeating the lawful functions of the Internal Revenue Service of the United States Department of the Treasury in the ascertainment, computation, assessment, and collection of revenue, particularly by impairing and obstructing the ascertainment and computation of taxes.
This charge in the above paragraph is the defraud/Klein conspiracy. Klein conspiracy is a term of art referring to a defraud conspiracy in a tax setting. See United States v. Klein, 247 F.2d 908 (2d Cir. 1957), cert. denied 355 U.S. 924 (1958). All practitioners should know the term of art, so that when a judge or colleague says the words "Klein conspiracy," the practitioners know what it means. The statute, 18 USC § 371, criminalizes two types of conspiracy -- a conspiracy to commit an offense (such as tax evasion) and a conspiracy to defraud (as applied in tax cases, a conspiracy to impair or impede the lawful functioning of the IRS as alleged in the indictment ¶ 6). This indictment does not allege the offense conspiracy although, based on all the allegations in the indictment, it probably could have. (Indeed, ¶ 7 does seem to make a pass at an offense conspiracy by alleging "The purpose of the conspiracy was to evade unlawfully FACKLER and KROUPA's tax obligations," but ¶ 6 seems to be the key charge for the Count; if they meant to allege an offense conspiracy in addition to the defraud/Klein conspiracy, that is an odd way to do it; for a more traditional way to charge both types of conspiracy, see the Stein indictment here, at ¶ 72, alleging both in the opening paragraph for the count.) Charging both the offense conspiracy and the Klein conspiracy can sometimes muddy up the water, particularly if charged in the same count, in charging the jury. (For example, the offense conspiracy to commit tax evasion requires proof of willfulness for the offense conspiracy because it imports that requirement from the offense that is the object of the conspiracy, whereas there is not similar importation of the willfulness element for the Klein conspiracy.
The Klein conspiracy is an obstruction crime -- a conspiracy to impair or impede the lawful function of the IRS. See generally John A. Townsend, Tax Obstruction Crimes: Is Making the IRS’s Job Harder Enough?, 9 HOUS. BUS. & TAX L.J. 260 (2009) Article available here; Appendix to article available here. It may be viewed as essentially the tax obstruction crime in § 7212(a), but with multiple parties; conversely, the tax obstruction crime in § 7212(a) may be viewed as a one person conspiracy, as DOJ Tax in a former version of the Criminal Tax Manual described it. My article goes into this and related issues in considerable detail, so I will move on for purposes of this blog entry.
Every case where husband and wife alleged cheat on the tax return probably could support a conspiracy charge. I have not done empirical research on this, but I don't think the Government usually charges a conspiracy in at least some, perhaps most, of husband and wife tax cheating. The extent of the actions as alleged in the Kroupa indictment may have precipitated the conspiracy charge, although it seems clear that, had conspiracy not been charged, convictions on the other counts would vindicate any legitimate prosecutorial interest the Government had.
In United States v. Reynolds, 919 F2d 435, 439 (7th Cir. 1990) [a tax crimes case], Judge Easterbrook lamented that the conspiracy add-ons are “inevitable because prosecutors seem to have conspiracy on their word processors as Count I; rare is the case omitting such a charge.” See also Brickey, “In Enron's Wake: Corporate Executives on Trial,” 96 J. Crim. L. & Criminology 397, 401, and 420–423 (2006) (empirical research that in federal corporate crime cases during the period 2002 through 2006, over two-thirds of the cases had multiple defendants and all of those had at least one conspiracy count).
I have now run out of time and will probably add some more on the conspiracy charge later this week. I will be traveling all day tomorrow.
[The defendants] did unlawfully, knowingly, voluntarily, and intentionally combine, conspire, confederate, and agree with each other to defraud the United States for the purpose of impeding, impairing, obstructing, and defeating the lawful functions of the Internal Revenue Service of the United States Department of the Treasury in the ascertainment, computation, assessment, and collection of revenue, particularly by impairing and obstructing the ascertainment and computation of taxes.
The Stein indictment linked above contains similar language. And my poking around on the web indicates that that this is a common formula.
So, why would it be necessary to allege anything other than that the defendants conspired to achieve the object of defrauding. What is that business of "combine, * * *, confederate and agree" in addition to "conspire." Do those extra words add anything? If the extra words are redundant, then they are not needed. If they are not redundant, but add something not covered by the statutory word "conspire," then they improperly expand the statute (note that the conjunctive is used so that the meaning all of these words must be present as written).
Thus, the courts have held that when the government proceeds under the conspiracy to defraud clause, it must plead the "essential nature" of the alleged fraudulent scheme. See, e.g., United States v. Helmsley, 941 F.2d 71, 90-91 (2d Cir. 1991). It is not sufficient for the indictment to simply reallege the language in the statute; rather, it must allege the fraudulent scheme in its particulars. United States v. Rosenblatt, 554 F.2d 36, 41 (2d Cir. 1977). This means that a defraud clause indictment should include (1) the name of the agency impeded, (2) the functions of the agency that were impeded; (3) the means used to impede the agency; and (4) the identities of those charged with impeding the agency. United States v. Mohney, 949 F.2d 899, 904 (6th Cir. 1991).
But, in my mind, that does not require that the charging document use other words for the statutorily required "conspire." And, at least one of the words -- confederate -- not found in the statute seem to me to be charged words -- making the charge appear more sinister than if only the statutory word conspire were used. Stated another way, if the prosecutor did not think he would have some advantage over using just the statutory word, the prosecutor would not put the extra nonstatutory words in the charging document.
Now, let's look at the jury charge instructions. I have not surveyed all the pattern just instructions for conspiracy, but have looked at the Fifth Circuit Pattern Jury Instructions, here, 2.15A (Offense Conspiracy) and 2.15B (Defraud / Klein Conspiracy) and the DOJ Tax CTM, here, No. 18.371-1 and 18.371-4, Conspiracy -- Existence of an Agreement. None of these documents mention the word combine or confederate. So, if the jury looks at the indictment, it might find itself a bit confused.
The discussion of the language of the charging document was revised on 4/6/16 6:41pm.

References: § 371
 § 7212
 § 371
 v. 
 § 371
 § 7212
 § 7212
 v. 
 v. 
 v. 
 v.