Opinion ID: 613010
Heading Depth: 4
Heading Rank: 3

Heading: The Evidence of Falsity

Text: It is undisputed that Care published a single issue of the Al-Hussam newsletter in January 1997. Dawn Goldberg, an IRS employee, testified that she would certainly expect the publication of a newsletter such as the Al-Hussam to be disclosed in response to Question 76 because the instructions say it should be, but, also, it's an activity of the organization. She later repeated that she would expect it to have been disclosed because, as we read in the directions, it falls in the category of `program service.' Consistent with this testimony, a thorough reading of the Form 990 instructions illuminates that the phrases activities and major program activities, used in Question 76 and the Form 990 instructions, encompass an organization's newsletters. In explaining a part of the form preceding Question 76, the Form 990 instructions define the term program services as mainly those activities that the reporting organization was created to conduct and which . . . form the basis of the organization's current exemption from tax. That section then includes the following explanation: Program services can also include the organization's unrelated trade or business activities. For example, publishing a magazine is a program service even though the magazine contains . . . advertising, the income from which is taxable as unrelated business income. Similarly, the instruction for Part III, Statement of Program Service Accomplishments, states: A program service is a major (usually ongoing) objective of an organization, such as adoptions, recreation for the elderly, rehabilitation, or publication of journals or newsletters. Specify the service outputs, products, or other measures of a program service, such as clients served, days of care, therapy sessions, or publications issued. Thus, in the full context of the Form 990 instruction, it is clear that the term activity used in Question 76 encompasses all program services, which are by definition major objective[s] of an organization and which, at the very least, include the publication of journals or newsletters. It is also clear that the publication of the Al-Hussam newsletters, in particular, was a major objective of Care. The evidence revealed that thousands of copies of the newsletters were printed and distributed internationally. Witnesses testified to the newsletters' underlying theme of the promotion of jihad. The newsletters contained descriptions of ongoing fighting happening in different corners of the world, interviews of fighters, and encouraging people to participate in the fight and, . . . if they can't participate, to provide funding. The jury heard excerpts from numerous issues of the newsletters in which readers were exhorted to finance the mujahideen if they could not otherwise join the jihad. The government combined this evidence with expert testimony explaining the concept of economic jihad, the belief that individuals who cannot participate in that fighting themselves . . . should at least finance someone who can. A reasonable jury could have considered the centrality of the Al-Hussam newsletters to Care's organizational mission as evidence both that Mubayyid would have recognized that publication of the Al-Hussam was an activity that should be disclosed, and that the Al-Hussam was willfully not disclosed to the IRS precisely because it reflected Care's non-charitable purposes. Mubayyid attempts to obfuscate Question 76's otherwise clear instruction by pointing to testimony by Dawn Goldberg on cross-examination. When questioned about a separate section of the Form 990 that asks filers to segregate the organization's expenses among three categories program services, managerial services, and fundraisingGoldberg admitted that the filer must use some amount of judgment. She acknowledged that, depending on the facts and circumstances, it might not be unreasonable for a filer to identify all of the printing expenses associated with a newsletter as fundraising expenses. Mubayyid claims that the possibility that he reasonably categorized the expense of publishing the Al-Hussam newsletters as a fundraising expense rather than a program service expense invalidates the argument that the newsletters are necessarily program services that would need to be disclosed in response to Question 76. This argument is unavailing. First, Mubayyid did not attribute Care's printing and publication expenses to fundraising on the Form 990 for 1997. Rather, all of Care's printing expenses for that year were categorized as managerial service expenses. The evidence thus belies Mubayyid's claim that his statement was not false because Care had consistently treated the Al-Hussam newsletters as merely a fundraising device, rather than an activity of the organization. Second, even if the attribution of printing expenses in 1997 was a mere scrivener's error, a reasonable jury could have concluded that Care's designation of the Al-Hussam newsletters as a fundraising activity would not have been a reasonable accounting choice. Dawn Goldberg testified that she looked at thirty-five Al-Hussam newsletters and saw a handful, maybe six or eight little blurbs related to fundraising. Referencing the Form 990 instructions' directive to allocate expenses that relate to more than one functional category, she acknowledged that a small amount of [the publication expenses for the Al-Hussam] might be attributable to `fundraising,' but that the newsletter is primarily educational and informative, and should therefore properly be designated as a program service. In light of the Form 990 instructions including the specific example of newsletters as a program service activityand Goldberg's testimony on the inappropriateness of designating the Al-Hussam as a fundraising device, it would have been reasonable for the jury to conclude that the designation instead reflected an intent to conceal Care's true nature. In any event, the jury was entitled to conclude that Mubayyid understood that Question 76's request for any activity of the organization not previously disclosed called for disclosure of Care's publication of the Al-Hussam newsletters, regardless of whether Care was permitted to allocate the associated expenses as fundraising in other parts of the Form 990. Taking another tack, Mubayyid claims that his answer was not false because the Al-Hussam newsletters had arguably already been disclosed to the IRS on Care's initial application for tax exemption, Form 1023, and therefore were not required to be disclosed in answer to Question 76. Here, Mubayyid refers to a statement in Care's initial Form 1023 that the organization's fundraising efforts would comprise [s]ubstantial efforts . . . by means of: . . . mailings. Again, his argument fails. A reasonable jury could have readily concluded that the Al-Hussam newsletters were not, in fact, the type of mailings disclosed to the IRS in the cursory reference to mailings on the Form 1023. To begin with, the Form 1023 refers to such mailings prospectively, yet the evidence at trial demonstrated that two Al-Hussam newsletters had already been published in Care's name at the time the Form 1023 was filed. Likewise, neither the Al-Hussam newsletters nor the Zakat Calculation Guide were submitted with the Form 1023 as representative copies of solicitations for financial support. Moreover, Robert Charnoff, a former IRS employee who had been responsible for reviewing Care's Form 1023 application, testified for the government that fundraising mailings are typically just a one- or two-page solicitation letter, while the evidence presented at trial demonstrated that the Al-Hussam newsletters primarily consisted of multi-page descriptions of the successes of jihad, exhortations to join the fighting, and reminders of the duty to engage in jihad. They contained only a few small blurbs that might be fairly characterized as overt fundraising. On this basis, Charnoff explained that he would have expected the Al-Hussam newsletter to be identified elsewhere because it's an activity in its own right. We thus conclude that, based on the evidence presented at trial, a reasonable jury could find that Mubayyid understood that the Al-Hussam newsletter was required to be disclosed in response to Question 76 on the 1997 Form 990. [35]
The government's evidence at trial showed that, by 1999, Care was operating a website that was described as similar in content to the Al-Hussam newsletters. A witness testified for the government that Mubayyid had approached him in 1997 or 1998 to discuss the construction of a website for Care. The two men worked together over the course of nearly a year on designing and naming the website, and on hiring a local business to host it. According to the witness, Mubayyid provided a CD of content that he wanted uploaded to the website, the witness constructed the website, and he provided Mubayyid with the administrative privileges to modify and update the website once it was up and running. The website was operational by early 1999. The government also introduced printed copies of the content of Care's website as of June 4, 2000, and March 1, 2001. Those printouts reveal that Care was providing regularly updated content to its website's readers. As one example, Care maintained a page entitled News from the Battlefields of Chechnya that provided daily news bulletins throughout late December 1999. The website also republished selected articles from the Al-Hussam newsletters, including a collection explaining the duty of jihad, an article entitled Story of a Muhajid, and an exhortation for readers to Do Something! Additionally, the website contained information about calculating Zakat and a contact page informing readers where to send their donations (with Care's United States tax identification number prominently displayed). In these respects, Care's website effectively replaced the publication of the Al-Hussam newsletter following its discontinuation in 1997. It provided an important communications link between the organization and potential supporters, and it sought to generate affirmative conduct to benefit the mujahideen. Hence, based on the website, the jury properly could have found that Mubayyid knowingly made a false statement about a material matter when he declared that the organization had engaged in no previously unreported activity in 1999 and 2000.
The third activity to which we turn our attention spanned all three years covered by Counts 3-5 and 8, and the alleged falsity was a matter of inaccurate disclosure rather than nondisclosure. Throughout the trial, the government argued that Mubayyid's failure to correct substantial misrepresentations in Care's Form 1023, through the attachments requested in Question 76, concealed the organization's support for and promotion of the mujahideen and jihad. In particular, the government alleged that Care's initial application for tax exemption was false because it failed to disclose to the IRS that Care's orphan sponsorship program focused on the orphans of martyrs. When asked to provide (a) a detailed description of the activity including its purpose,  Muntasser stated in the Form 1023 that Care would develop a program for orphan sponsorship in Bosnia, Afghanistan, and Kashmir. Consistent with this representation, each of the Form 990s submitted by Mubayyid reported a substantial amount of cash assistance to orphans and widows. At trial, an expert for the government, who testified that he had reviewed the materials and solicitations associated with Care's orphan sponsorship program, opined that the purpose of the program's focus on the orphans of martyrs was to promote violent jihad: In the context of encouraging people to go and participate in fighting, it's important to remove anything that may prevent them from doing so, to remove disincentives. If a person who is inclined to go fight knows that if something should happen to him that his family would be taken care of, that removes the disincentive, and he's more likely to be able to go and fight. The witness also testified that he had seen similar, targeted solicitations used by organizations to support mujahideen activities many times. This focus was reflected in Care's website solicitation, which depicts a child to be sponsored as an orphan whose father died in defense of the faith. Because orphan sponsorship was, from Care's own perspective, a responsive answer to the call for activities on the Form 1023 and program services on the Form 990s, Mubayyid cannot sensibly deny that it was also an activity within the understood meaning of Question 76. Instead, as with the Al-Hussam newsletter, Mubayyid suggests that this activity had already been disclosed to the IRS on Care's Form 1023 and on Care's Form 990s for previous years. Although those forms did not reveal that the organization's orphan sponsorship focused on the children of martyred fighters, Mubayyid argues that, because the Form 1023 disclosed that the program would focus on orphans in war-torn countries, [i]t is no great inferential leap to conclude some of the widows and orphans became such because husbands and fathers died fighting. He also notes that the sole defense witness, a former IRS employee, testified that the program's focus would not have changed his opinion of Care's entitlement to tax exemption because widows and orphans are traditional objects of charitable aid. It's not significant for tax purposes how they became widows and orphans. The defense testimony was directly contradicted, however, by Robert Charnoff, the IRS employee who actually reviewed Care's application. Charnoff testified that he almost certainly would have denied Care's initial application for tax exemption if Care had disclosed that its orphan sponsorship program targeted children of martyred mujahideen because it's telling would-be fighters in foreign conflicts that if something happens to them, if they're killed say, this organization will provide funds to their orphans. So the net effect is it's an inducement for them to go to these areas of conflict. Likewise, Dawn Goldberg testified that evidence indicating that Care was soliciting people to go out and fight, or soliciting money to help fighters, could have led to the revocation of Care's tax exemption because one of the basic things [a 501(c)(3) charity] can't do is they can't do anything that's illegal or violate[s] public policy. The materiality to the IRS of the undisclosed focus of Care's orphan sponsorship program demonstrates why the simple listing of an orphan sponsorship program on the Form 1023 and prior Form 990s was not an adequate disclosure of the activity that was in fact being carried out by Care. To employ a counterfactual, if Care had initially conducted the unfocused orphan sponsorship program described in the Form 1023, but later elected to focus its donations on the orphans of martyrs, the testimony by Charnoff and Goldberg makes clear that the change in the program's focus should have been disclosed in response to Question 76 as a substantial modification. On the same basis, it would have been reasonable for the jury to have concluded that Care's Form 1023 described an orphan sponsorship activity that Care had never conducted, and hence Mubayyid was required to report Care's actual orphan sponsorship program in response to Question 76 as an ongoing activity that had never been accurately disclosed. The 990s themselves, though incomplete in the way we have described, provide evidence that the orphan sponsorship program was ongoing during each of the tax years in question. In addition, a government witness who volunteered for Care in 1996 and 1997 acknowledged that Care was actively raising money for orphan sponsorship during those years, and authenticated a flyer soliciting donations for orphans in language substantially similar to that contained on the website. In 2000 and 2001, as described above, the website featured the program in a way that made clear its true purpose. Although there was no direct testimony or record evidence confirming the program's operation in 1999, the other evidence permits the reasonable inference that it was an ongoing activity. We thus conclude that the government presented sufficient evidence from which a reasonable jury could have found that, in response to Question 76 on Care's Form 990s, Mubayyid willfully failed to disclose at least one reportable activity that occurred in each of the 1997, 1999, and 2000 tax years. Any arguable ambiguity in the temporal scope of Question 76 could not, therefore, have precluded Mubayyid's conviction for making a false statement; Mubayyid's answers would have been false even under the interpretation of the question consistent with his claimed understanding. For the foregoing reasons, we affirm Mubayyid's convictions on Counts 3, 4, and 5, for filing false tax returns in violation of 26 U.S.C. § 7206(1), and his conviction on Count 8, for corruptly endeavoring to obstruct the administration of the Internal Revenue laws in violation of 26 U.S.C. § 7212(a).