Source: http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19791022_0040261.C02.htm/qx
Timestamp: 2017-01-16 11:09:17
Document Index: 414673773

Matched Legal Cases: ['§ 3237', '§ 7201', '§ 7201', '§ 7206', '§ 3237', '§ 3237', '§ 3237', '§ 3237', '§ 7201', '§ 7201', '§ 3237', '§ 3237', '§ 3237', '§ 3237', '§ 3237', '§ 3237', '§ 3237', '§ 7201', '§ 3237', '§ 3237', '§ 3237', '§ 3237', '§ 7201', '§ 3237', '§ 3237', '§ 3237', '§ 3237']

IN RE UNITED STATES OF AMERICA, PETITIONER, UNITED STATES OF AMERICA,v.MICHAEL CLEMENTE, DEFENDANT.
Petition by the United States for a writ of mandamus directing the United States District Court for the Southern District of New York (Hon. Leonard B. Sand, Judge) to vacate an order transferring prosecution of income tax offenses to the Eastern District of New York pursuant to 18 U.S.C. § 3237(b). Petition granted and writ of mandamus issued.
The original indictment charged defendant Michael Clemente and ten others with racketeering, extortion, labor pay-offs, and tax evasion. Ten counts charged Clemente with income tax offenses in violation of 26 U.S.C. §§ 7201 and 7206(2) for the years 1973-1977. Each of the § 7201 counts alleged an attempt to evade taxes by signing and mailing a false income tax return, and the making of these returns was also alleged to be in violation of § 7206(2). The indictment alleged venue in the Southern District of New York. Relying on 18 U.S.C. § 3237(b),*fn1 Clemente moved to have the tax counts transferred to his district of residence, the Eastern District of New York. He submitted an affidavit stating that his tax returns for the years in question had been transmitted to the Internal Revenue Service by mail. Clemente's affidavit indicated that the returns were mailed from his residence within the Eastern District of New York to an I.R.S. Office also located in the Eastern District.
The Government resisted the motion, contending that it would establish venue for the tax counts in the Southern District of New York on the basis of the preparation of the tax returns and other acts of evasion in that District.*fn2 Though the Government contended that Clemente's accounting firm prepared the returns in the Southern District and mailed them to his residence in the Eastern District for signing, it represented that neither the mailing of the returns nor of any other items will be used to establish venue in the Southern District. The Government read § 3237(b) to permit the defendant to elect trial of tax counts in his district of residence only when a mailing is used to establish venue elsewhere.
The District Court (Hon. Leonard B. Sand, Judge) granted Clemente's motion to transfer venue for the tax counts to the Eastern District of New York. Judge Sand concluded that the tax counts fall within the statutory definition of an offense that "involves use of the mails" because in fact the mails were used in the course of activity alleged to be unlawful. This broad, though arguably literal, reading of the statute has been accepted by other district courts, United States v. DeMarco, 394 F. Supp. 611 (D.D.C.1975); United States v. Youse, 387 F. Supp. 132 (E.D.Wis.1975); see also United States v. Turkish, 458 F. Supp. 874, 878 n.5 (S.D.N.Y.1978); United States v. Dalitz, 248 F. Supp. 238 (S.D.Cal.1965), though the issue does not appear to have been considered by any appellate court.*fn3 The Government responded with a superseding indictment, which charged Clemente with all of the same offenses, including, in Counts 200-209, the income tax offenses; as redrafted, however, the tax counts omitted any reference to the mailing of a tax return. Clemente again moved to transfer the tax counts. Judge Sand granted the motion, having previously indicated that § 3237(b) was applicable even if a mailing was not alleged in the indictment. The Government seeks a writ of mandamus to test the trial court's construction.
There are at least three possible interpretations of the phrase "involves use of the mails." Most broadly, the phrase could apply to an offense in the course of which a mailing occurred. More narrowly, the phrase could apply to an offense in which a mailing not only occurred but is also an element of the crime charged.*fn4 Most narrowly, the phrase could apply to an offense in which a mailing not only occurred but is also the basis on which the prosecution seeks to establish venue.
Since the statutory language does not unambiguously require any one of these three interpretations, it is appropriate to resort to available indications of legislative intent. Chief among these is the "mischief to be corrected," an important guide to statutory interpretation and one that Justice Cardozo relied upon to avoid a reading that would "stick too closely to the letter" of a statute. Warner v. Goltra, 293 U.S. 155, 158-59, 55 S. Ct. 46, 48, 79 L. Ed. 254 (1934); see also In re Letters Rogatory, 385 F.2d 1017, 1020 (2d Cir. 1967) ("The amendment must be interpreted in terms of the mischief it was intended to rectify.").
There are additional indications that Congress did not intend the occurrence of any mailing in the course of an offense to provide the defendant with the option to transfer venue to his district of residence. Congressman Preston told the subcommittee hearing, "The bill would not cover situations where the use of the mails is not an ingredient of the offense charged."*fn5 Id. at 6. Moreover, both the House and Senate reports observed that "in the type of case covered by this bill, the acts for which the defendant is really being tried are generally committed in the district in which he resides and certainly bear little or no relationship to the place where his tax return is received." H.R.Rep.No. 1890, 85th Cong., 2d Sess. (1958); S.Rep.No. 1952, 85th Cong., 2d Sess. 2 (1958), Reprinted in (1958) U.S.Code Cong. & Admin.News, pp. 3261, 3262. That observation surely excludes a prosecution like Clemente's since the Government is undertaking to prove that his criminal conduct, not the receipt of any mailed item, occurred in the Southern District of New York. There is no indication that Congress intended to give a taxpayer the option to be tried in his district of residence when it is his criminal conduct and not the use of the mails that the Government relies upon to establish venue elsewhere.
Finally, a construction of § 3237(b) that relies upon any mailing in the course of an offense should be rejected because it leads to bizarre results unlikely to have been intended by Congress. In a multi-defendant case such as this, where the Government alleges that the evidence of defendant's racketeering is also evidence of his receipt of unreported income, a transfer of the tax counts to the district of residence would mean that the witnesses would bear the inconvenience and the public would bear the cost of two substantially similar trials, in the event that either all counts against Clemente or only the tax counts against him were transferred. A broad reading of the statute also leads to unintended results in cases involving only one defendant. Consider the defendant who earns unreported income in District A, has his tax return prepared in District A, and files his return in District A because an I.R.S. service center is located there. Under a broad reading of the statute, he could obtain a transfer to District B, his residence, simply because his accountant mailed him his return for signature, even though filing was accomplished by hand delivery. Or a defendant could obtain the same result whenever he could allege that the mails were used in some connection with obtaining income, even though the item mailed was not the tax return.*fn6 Thus interpreted, the statute would cover virtually all violations of § 7201. Congress could not have intended this result because it used the phrase, "involves use of the mails," as a modifier to limit the § 7201 violations to which § 3237(b) applies.
We conclude that the "involvement" of the mails that Congress intended was not the bare occurrence of a mailing during the course of the alleged offense. Congress was legislating an exception to a venue statute that permitted the Government to use the fact of a mailing into a distant district to prosecute a taxpayer far from his residence. The exception of § 3237(b) is a shield against that governmental power. It is not a sword enabling the taxpayer to transfer prosecution to his district of residence in cases such as this where the Government seeks to establish venue wholly apart from any use of the mails. The statute does not enable a taxpayer who has violated the law in a district by means other than use of the mails to escape prosecution in that district simply by mailing a letter. We construe § 3237(b) to apply, at most, to tax prosecutions that involve the use of the mails in the sense that a mailing, whether or not alleged in the indictment, is the basis on which the prosecution seeks to establish venue in a district other than the taxpayer's district of residence.*fn7 Under this construction of the statute, Clemente's motion to transfer venue of the tax counts should have been denied.
We also conclude that this is an appropriate case for the issuance of a writ of mandamus to correct the District Court's construction of § 3237(b). The District Court did not purport to exercise discretion, but felt obliged to transfer the tax counts. This transfer was beyond the power created by Congress. Correction by mandamus is especially appropriate here since the United States cannot otherwise secure appellate review of the District Court's ruling. Cf. Helstoski v. Meanor, 442 U.S. 500, 99 S. Ct. 2445, 61 L. Ed. 2d 30 (1979); United States v. Weinstein, 511 F.2d 622 (2d Cir.), Cert. denied, 422 U.S. 1042, 95 S. Ct. 2655, 45 L. Ed. 2d 693 (1975).
The government, relying on the first paragraph of 18 U.S.C. § 3237(a),*fn1 which (irrespective of whether or not the mails are used) allows venue in any district where a crime was committed, continued or completed, has commenced prosecution in the Southern District of New York, where Clemente's returns were prepared by his accountant.
Clemente has submitted to the district court an affidavit stating that he believes the returns in question were filed with the IRS by mail.*fn2
The government argues that since it has not relied on mailing to establish venue, we should not allow the transfer merely because mailing is "involved in some way." (Brief at 9-10.) Since it is clear that the government does rely on the first paragraph of § 3237(a) for venue,*fn3 the argument is, in effect, that the option given a defendant in (b) is not available if the government relies only on the first paragraph of (a).
Thus, instead of "Notwithstanding subsection (a)," the government would have us read § 3237(b) as if it provided "Notwithstanding The second paragraph of Subsection (a)." Subsection (b)"s introductory phrase as written, however, obviously contains no such limitation.
Given the mailing claimed by Clemente, the applicability of "involves use of the mails" is hardly unclear. While the word "involves" is broad, the use of the mails here is quite obviously encompassed in any reasonable interpretation: the income tax returns which the government contends violated §§ 7201 and 7206(1) were mailed to the IRS. Without doubt the alleged tax offenses here "involved" use of the mails. Indeed, in other cases the government has contended that the phrase " "where the offense involves use of the mails' . . . Means the mailing by the taxpayer of his return to IRS." E. g., United States v. DeMarco, 394 F. Supp. 611, 614-15 (D.D.C.1975) (emphasis added). While this may not be all that the phrase means, it is difficult to imagine that it does not include at least the case confronting us, where the defendant's allegedly fraudulent and evasive return is mailed to the IRS.
As stated by the majority, the chief goal of the enactment of § 3237(b) was to give a taxpayer an option to avoid being prosecuted in a district remote from his home simply because he had mailed his tax return to that district. Section 3237(b) was introduced as H.R. 8252, 85th Cong., 1st Sess. (1957), by Rep. Prince Preston of Georgia. It was enacted in the form recommended by the Senate and House of Representatives Judiciary Committees. The committee reports recommending its passage focused principally on the problem of distance.*fn4
There was no suggestion in either report that the defendant's option to transfer would not be exercisable unless the government relied on mailing to establish venue.*fn5 The only elaboration on the phrase "involves use of the mails" was the description of the bill as permitting the defendant to have transferred to his home district certain offenses, with the statement that "The offenses covered are The use of the mails to commit acts described in sections 7201 . . . and 7206(1), (2), and (5) . . . ." H.R.Rep.No. 1890, Supra at 1; S.Rep.No. 1952, Supra at 1, (1958) U.S.Code Cong. & Ad.News at 3261. (Emphasis added.)
Hearings on H.R. 8252 Before Subcommittee No. 4 of the House Committee on the Judiciary, 85th Cong., 2d Sess. 6 (Apr. 25, 1958) (unpublished) (hereinafter "Hearings").*fn6 This statement, however, was made in support of Representative Preston's original bill which, instead of merely giving a defendant the Option to have venue changed to his home district, Made venue in his home district mandatory.
Hearings, Supra at 26; See 104 Cong.Rec. 13064 (1958). (Emphasis added.) This was a vital difference because the Sixth Amendment to the Constitution gives a defendant the right to be tried in the district in which the crime was allegedly committed. Since the original H.R. 8252 Required venue to be in the defendant's home district, the Treasury Department had attacked the bill as constitutionally flawed.*fn7 It was expressly in response to these attacks that Representative Preston stated his view that mailing would be an essential ingredient of the offense charged, and repeatedly cited that portion of the original bill which expressly conditioned venue on movement of the mail through the defendant's home district. For example, the text of Representative Preston's statement surrounding the language relied on by the majority is as follows:
There are many reasons why Representative Preston's statement that mailing must be an essential ingredient for § 3237(b) to apply*fn8 and whatever implication may be found therein that the government must rely on mailing for that subsection to apply should not hold sway.*fn9 First, Representative Preston's view cannot be imputed to Congress as a whole. Even before the bill was amended the Preston view was rejected by at least one member of the House Subcommittee before which he testified. Representative Dowdy, who supported the bill, said, "I do not consider mailing an element in this offense."*fn10 In addition, neither the House nor the Senate Judiciary Committee reports contained any hint of Representative Preston's view. H.R.Rep.No. 1890, Supra ; S.Rep.No. 1952, Supra. Most importantly, the constitutional flaw that Representative Preston was addressing was eliminated, as the congressmen decided to make home district venue optional rather than mandatory (Hearings, Supra at 23-24), and the linguistic underpinning of the Preston cure for the constitutional flaw, I. e., the original condition that the "mail matter has moved through the district," was deleted.
Not surprisingly, in light of the plain, broad language of § 3237(b) and the history of its descriptions and amendments before enactment, every court which has dealt with a timely § 3237(b) motion to transfer the offenses described in §§ 7201 or 7206(1), (2), or (5), has granted the transfer where use of the mails was claimed by the defendant, regardless of whether or not the government relied on use of the mails to establish venue. See United States v. DeMarco, 394 F. Supp. 611 (D.D.C.1975), Petition for mandamus denied without opinion (D.C.Cir.); United States v. Youse, 387 F. Supp. 132 (E.D.Wis.1975); United States v. Dalitz, 248 F. Supp. 238 (S.D.Cal.1965); United States v. Rosenberg, 226 F. Supp. 199 (S.D.Fla.1964); United States v. Wortman, 26 F.R.D. 183, 192 (E.D.Ill.1960); United States v. Kimble, 186 F. Supp. 616 (S.D.N.Y.1960).*fn11
These cases have unanimously rejected the arguments urged by the government here. In United States v. Kimble, for example, the government contended, Inter alia, that the defendant had a § 3237(b) option only if "the indictment alleges use of the mails and residence of the defendant in a district other than that in which the indictment is found." 186 F. Supp. at 617. The court found the government's contention
Some of the transfers required by § 3237(b) have, regrettably, resulted in inefficiencies. For example, venue as to two defendants charged with falsifying, or aiding another to falsify, the same income tax return has been transferred to the separate home districts of each defendant. United States v. Rosenberg, supra, 226 F. Supp. at 200; United States v. DeMarco, supra, 394 F. Supp. at 614-18. Transfers have been allowed even though the distance between the defendant's residence and the original forum is small. United States v. Kimble, supra, 186 F. Supp. at 616-17 (transfer from Manhattan (Southern District of New York) to Brooklyn (Eastern District of New York)); United States v. Wortman, supra, 26 F.R.D. at 191-93 (transfer from East St. Louis (Eastern District of Illinois) to St. Louis (Eastern District of Missouri)). Transfer has been allowed even though it greatly enlarged the distance from defendant's abode to the courthouse: one defendant's residence in the Southern District of Illinois was just 9 miles from the courthouse in the Eastern District of Illinois, the original forum; venue as to that defendant was transferred to the Southern District of Illinois in which the courthouse was 100 miles from his home. The court felt it had "no alternative" but to transfer:
More than two decades have passed since Congress enacted § 3237(b), and until now all of the courts have uniformly felt compelled to apply the statute in accordance with the plain breadth of its language. Although none of these decisions is binding on us,*fn12 they are nonetheless significant, for during this period Congress has evinced no dissatisfaction with the courts' straightforward application of the language. While in many circumstances congressional inaction may be of little significance, since it is permissible to infer that Congress has been completely engrossed in matters other than the section in question, no such inference is warranted here.
In 1966, eight years after enactment of § 3237(b), Congress again turned its attention to this subsection, amending it to add another offense as to which a defendant could opt to be prosecuted in the district of his residence.*fn13 Between 1958 and 1966, courts had held, Inter alia, that use of the mails need not be alleged (United States v. Kimble, supra (1960)); that the distance between the defendant's residence and the district chosen by the government need not be great (Id.); that the transfer may even greatly enlarge the distance between a defendant's residence and the situs of trial (United States v. Wortman, supra (1960)); and that co-defendants charged with tax fraud with respect to the same return may be transferred to different districts for separate, duplicative trials (United States v. Rosenberg, supra (1964)). They had, in short, applied the statute broadly, as it was written.