Court Opinion

ID: 9482067
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:39:20.769008+00
Date Added: 2024-06-11T17:48:44.685202
License: Public Domain

RONEY, Senior Circuit Judge,
dissenting:
I respectfully dissent.
Although the indictment as originally written may have made sufficient allegations to state a crime under this statute, the amended indictment, which deletes the allegations concerning the preparation of false returns, fails to do so. The Government by insisting upon prosecuting the defendant under this statute distorts the meaning and purpose of the statute. That the defendant committed acts in violation of the criminal laws of the United States is not the question. If the acts charged did not violate this statute, then the indictment should have been dismissed and the Government should be forced to proceed under the statutes which Congress intended for prosecution of defendant’s transgressions.
The indictment against Popkin alleged that he “did corruptly obstruct and impede and endeavor to obstruct and impede the due administration of Title 26, United States Code, by creating a California corporation for Stephen Musick to disguise the character of illegally earned income and repatriate it from a foreign bank.”
The purpose of forming this corporation was to repatriate funds located in an offshore account back into this country. This is a consummate example of money laundering which would have been punishable under 18 U.S.C. § 1956 had the acts been committed after its passage in 1986. It is clear that the primary purpose in forming the corporation was to get the money back into the country. Nothing concerning taxes or much of Popkin’s activity relied upon by the court was alleged in the indictment in itself. After striking the accusations concerning filing false returns, the indictment alleges only that the defendant created a corporate entity for the purpose of disguising illegal income in violation of Title 26. The indictment does not allege and the Government even now does not satisfactorily explain how this without more violates the tax laws. Although the illegal nature of the funds would have been successfully concealed, Musick still could have paid any tax obligations owed on the money without violating the tax laws at all.
*1542It is important to bear in mind that the defendant has not been convicted of aiding and abetting or assisting in the violation of the tax laws under either 18 U.S.C. § 7206 or under the general federal aiding and abetting statute, 18 U.S.C. § 2, but has instead been charged with the substantive offense of corruptly impeding or endeavoring to impede the due administration of the tax laws. The record in this case does not establish that he has done this.
The statute under which this indictment was brought is set forth under “Sec. 7212 Attempts to interfere with the administration of internal revenue laws, (a) Corrupt or forcible interference.”
The defendant’s major argument is that an essential element of Sec. 7212(a) of Title 26 is that the act or conduct of the accused involve the use of force or threats against the person of a particular government agent. Although this argument was properly rejected by the court in this case, the word “corruptly” should not be so easily written out of the statute. The court’s interpretation of this section of the tax law has the effect of virtually eliminating the word “corruptly” from the statute. The statute requires that the defendant must “corruptly” obstruct or endeavor to obstruct the execution of the tax laws. This should mean something more than just obstructing the execution of the laws as a matter of fact. There is nothing inherently “corrupt” about the formation of a corporation.
Almost without exception, the reported cases concerning a prosecution under this Act have involved some act that would be either illegal under state or federal law or would tend to be corrupt independently of its purpose. See United States v. Ratcliff, 806 F.2d 1253 (5th Cir.1986) (threatening telephone calls to agent); United States v. Sciolino, 505 F.2d 586 (2d Cir.1974) (flash picture of agent and display of cartridge box); United States v. Johnson, 462 F.2d 423 (2d Cir.1972) (defendant barred entry into building; said agents could enter over his dead body; scuffle ensued and defendant assaulted arresting agents); United States v. Varani, 435 F.2d 758 (6th Cir.1970) (letter threats of violence against agent); United States v. Rybicki, 403 F.2d 599 (6th Cir.1968) (defendant appeared in his doorway holding a double-barreled shotgun); United States v. Guthrie, 385 F.2d 410 (7th Cir.1967) (defendant threatened that “he might shoot any government agents who approached him in connection with the investigation”); United States v. Reeves, 752 F.2d 995 (5th Cir.1985) (filing frivolous lien against residence of IRS investigator). In each case, there was a retaliatory element against the agent or the Internal Revenue Service.
Such is the case in the prosecutions under 18 U.S.C. § 1503 cited in the Court’s opinion. United States v. Griffin, 589 F.2d 200, 206-07 (5th Cir.1979) (testifying falsely before a federal grand jury); United States v. Partin, 552 F.2d 621 (5th Cir.1977) (inducing witness not to appear and to testify falsely); Anderson v. United States, 215 F.2d 84 (6th Cir.1954) (effort to alter testimony of witnesses).
In United States v. Hylton, 710 F.2d 1106 (5th Cir.1983), the Court held that the filing of non-frivolous trespass complaints against IRS agents did not violate § 7212(a), even though the action may have been motivated by a desire to impede the agent’s investigation. In other words, legal activity is not proscribed by § 7212(a), even though it is undertaken for the purpose of impeding or obstructing the execution of the tax laws.
The only case cited not dealing with actions interfering directly with agents of the IRS is United States v. Williams, 644 F.2d 696 (8th Cir.1981), in which the defendant was convicted under § 7212 for encouraging others to submit false W-4 forms. In that case, the “corrupt” action involved a direct interference with and violation of IRS procedures and regulations.
In this case, the single allegation of activity is that the defendant created a corporation, a lawful act under the laws of California. Without the allegation of false tax returns, the defendant is not charged with a corrupt act, but simply charged with forming a corporation for the purpose of laundering money.
No other case under this section involves the setting up a corporation for potential *1543use as a tax shield. Every case cited other than Williams in the statute’s thirty-seven year history involved actions which directly interfered with IRS agents attempting to carry out their jobs. A reading of the statute itself reveals why. Aside from the caption for the statute, virtually the entire text is directed at either the direct or indirect use of activity against agents of the IRS which have the effect of obstructing or interfering with the enforcement of the tax laws. This is not a statute designed to sweep within its reach any and all efforts to evade taxation. Other more specific statutes are designed for that purpose. See, e.g., 18 U.S.C. § 7201.
The legislative history reveals that Congress intended only to prohibit interference with IRS agents, either through physical or verbal threats or through other actions which impeded their efforts to enforce the tax code. The court in United States v. Walker, 514 F.Supp. 294, 304-05 (E.D.La.1981), reviewed the history of this provision and traced its origins to two previous acts, Section 3601(c) of the Internal Revenue Code of 1939 and Section 38 of the Internal Revenue Act of 1864, both of which dealt solely with interference directed at agents of the IRS. The Senate Report on § 7212 also speaks only of acts which impeded the ability of IRS agents to perform their function. S.Rep. No. 1622, 83rd Cong., 2d Sess. 1954, reprinted in [1954] U.S.Code Cong. & Admin.News 4621, 5254.
The defendant was simply tried under the wrong statute. I would reverse the conviction.