Regarding The Recent Trial Of Irwin Schiff And His Associates
I've been asked by several readers to comment on the truly distressing conviction of Irwin Schiff and his associates earlier this week (background on which can be found at www.paynoincometax.com, if necessary). These requests were specifically of the nature of "Please comment on what Irwin did wrong, so that if one of us faces a legal assault in the future, we won't make the same mistakes." Solely due to the inarguable virtue of this interest, I will briefly, and reluctantly, discuss this affair as best I can.
First, let me explain that my reluctance is due to the fact that Irwin (and no doubt his friends Cindy and Larry as well) is a man entitled to his dignity. My position regarding Irwin's opinions about the nature of the "income" tax notwithstanding, I view him as a courageous American who has sought to uphold the law as he understands it, even in the very teeth of a fearsome foe; further, Irwin's relentless dedication to the task of drawing the curtain aside from what the government would very much like to remain hidden has been an inspiration to all others similarly engaged. I am loath to discuss even what I see as errors made against a corrupt prosecution-- in the face of which anyone can be forgiven a stumble or two-- at a time when this fine man is so beset with ill fortune.
In that vein, it is to be understood that the following observations are irrelevant to the fact that, as the offenses with which Irwin and his associate were charged all required "willfulness" as an element (which is the deliberate disregard of, or offense against, a personally-acknowledged legal duty), these convictions were an utter travesty. Anyone who has spent five minutes with Irwin knows beyond the shadow of a doubt that his beliefs about the "income" tax are sincerely held.
Although reporting from the trial (such as reached my ears and eyes, anyway) was heavy on diatribes and extremely light on description of the actual arguments made, it would appear that the defendants were prevented from addressing the jury as to the basis of their beliefs-- that is, they were prevented from arguing, and presenting physical evidence, as to WHY they believe what they do. This left the prosecution free to claim that the U. S. Supreme Court's ruling (in Cheek v. United States, 498 US 192, (1991)) that even an unreasonable belief, if sincerely held, vitiates "willfulness", is immaterial in this case, because nobody could sincerely believe what Schiff and company claim they do-- instead (continues this argument), they just fabricated this elaborate contention about their "beliefs" in order to furnish themselves with a "Cheek" defense against their righteous prosecution for unlawful attempting to enrich themselves through violations of the tax laws.
To the extent that the defense was, in fact, restrained in this fashion, the court sought to evade the "Cheek" rule which relevantly is as follows:
Obviously, the establishment of "good-faith" cannot be restricted to a defendant's mere strenuous assertions as to his beliefs-- "good faith" arises as a consequence of investigation and reasoning. One cannot come to a conclusion "in good faith" without a reason for coming to that conclusion. Thus the "good faith" provision referenced in the 'Cheek' ruling precludes the trial court from barring a defendant from demonstrating to the jury the basis on which his conclusions were reached.
The government would attempt to argue in response that because the same ruling holds that a belief need not be "objectively reasonable", the court need not allow the defendant to establish the "reasonableness" of his belief, as it is therefore moot. However, this is a false position. The "good faith" aspect of the "willfulness" defense which the Supreme Court properly honors in the 'Cheek' ruling rests on subjective reasonableness-- that is, the arrival at a position which is reasonable solely within the context of the defendant's own research and ruminations. In fact, what the Supreme Court specifically and unambiguously says is that objective reasonableness is not required for a defendant to successfully assert a "willfulness" defense, but subjective reasonableness is, and thus a trial court may not forbid evidence relevant to this consideration.
The Supremes go on to note that the government is free to present its own evidence as to information within the knowledge of the defendant-- which the jury can consider as contradictory to that presented by the defendant, and thus relevant to the subjective reasonableness of his conclusions and his claims to have arrived at them in "good faith". That the government may present such evidence at all (and, of course it must do so in any event, as it bears the burden of establishing the existence of a "known legal duty") establishes irrefutably that the defense must have its own turn on the same field.
I trust that Irwin and his associates will take note of, and press, these points vigorously in appealing their convictions. It would be my pleasure and honor to consult with them in this regard, and I hope that any reading these words who has their ear will pass this offer on.
(It is reported that Irwin demanded-- repeatedly-- to be allowed to introduce portions of the law, etc. upon which his opinions had been formed, but was rebuffed by the judge, apparently on the basis of the fact that the government did not intend to introduce similar evidence. Since this reasoning obviously doesn't stand up in light of what I have pointed out above, I am presuming that Irwin didn't argue these points at trial, but was taken in by the false logic suggesting that "reasonableness" was moot, period. I may be doing him an injustice-- he may have argued this point cleanly, and been overruled anyway by a judge willing to abide a reversal tomorrow for the sake of a conviction today. There is no question that Judge Dawson was prepared to make just such a deal-- this is proven both by his failure to insist that the government carry its proper burden of proof regarding the defendant's "known legal duties", and by the fact that co-defendant Cindy Neun's well-used copy of the IRC WAS introduced into evidence during the trial-- by the government-- but when the jury asked to see it during deliberations, Judge Dawson refused that request.)
All that having been said, my comments about "mistakes made" other than those discussed above will seem brief and dry, and must be preceded by a disclaimer: I am sorely hampered by the fact that the most relevant documents-- the actual indictments and the defendant's direct responses to those indictments, do not appear to have been posted for general viewing. At least, I have not been able to find these documents. What I DO have to work with are nothing more than several "memoranda of law" posted by Irwin in support of an unposted original motion to dismiss the indictment, and the references to charges in Judge Dawson's instructions to the jury. This is therefore a forensic exercise, and my discussion will be largely academic and speculative. Furthermore, I will only address the issue of responding to charges of a receipt of "income" and a related failure to pay a theoretically consequential tax. Most of the other charges (as near as I can discern their nature), such as those involving the preparation of documents for others, are of a character which would likely allow only the "willfulness" defense.
Regarding that receipt of "income", it appears from the instructions given to the jury that nothing more was asserted in the indictment than that Irwin (and Cindy Neun) received money, which was gratuitously characterized as "income" without any accompanying allegations to support that characterization. Such a bare assertion leaves an essential element of any "income" tax crime unstated.
The "income" tax is an excise on the profitable returns of the exercise of a federal prerogative, an interest in which the federal government has, of course, a claim of right. The taxable activity is measured by the money produced, and for purposes of simplification, we refer to that kind of money as "income", in the same way one might point to a photograph and say, "That's Jim," rather than, "That's a picture of Jim."
Of course, calling a photograph "Jim" doesn't make it Jim, and calling any given receipt of money "income" doesn't make it the proceeds of a taxable activity. In order to establish that any given receipts constitute "income", it is essential to establish that they are in fact the proceeds of a taxable activity. This is as much a fundamental element of a tax offense as is the establishment that property alleged to be stolen does in fact belong to someone else in a prosecution for theft. In such a case, it is not enough that an indictment allege that the accused took the property-- it must also be alleged that the property was not his to take. Similarly, in a tax case, the prosecution must prove not only that the accused received money, but that the money was received through an activity in which the government can claim an interest. There is no tax laid on money, nor on the receipt of money. The tax is laid on "income".
However, it is an idiosyncrasy of our federal criminal justice system (codified in rule 12(b)(3) of the Federal Rules Of Criminal Procedure) that unless the accused demurs to an indictment for failing to allege an essential element of an offense in a preliminary hearing, the prosecution is excused from an obligation to prove the truth of that specific element during trial. Challenge regarding any such defect, if not made upon presentation of the indictment (or by way of motion for a bill of particulars within 10 days or arraignment), is deemed to be waived. Only challenges to jurisdiction, or an outright failure to allege an offense, must be subsequently entertained by the court; and only the elements alleged in the final indictment must be proven at trial.
For instance, consider a hang-glider charged with flying below an altitude of 100 ft. and thus violating a law against such behavior. If he allows the matter to go to trial with such an indictment left unchallenged, the prosecution will be obliged to prove only that he was indeed flying below 100 feet. If this is proven, the hang-glider can expect to be convicted. If, however, the hang-glider challenges the indictment, pointing out that the authority under which the law in question is promulgated is confined in its application to powered aircraft, he can then oblige the prosecution to include, as an essential element of the offense, that he was flying below 100 ft. AND that he was doing so in a powered craft. Now, the prosecution must prove BOTH elements of the offense during the trial.
Sadly, it appears that Irwin and his associates left the indictment's defects as to their receipt of "income" unchallenged. Although the memoranda of law Irwin posted suggest that his motion to dismiss did seek to contest the government's presumptions as to his liability for a tax on the "income" that he was alleged to have received (along with a few other things), these are losing arguments if his receipt of "income" above a threshold amount is left to stand as a given, and it seems clear form the court's instructions to the jury that this was the case. Nonetheless, every potentially criminal aspect of even the "income"-receipt-related offenses are amenable to the "willfulness" defense discussed earlier. Thus, there is still reason to hope that at the end of the day, the unfortunate consequences of this mistake may yet be undone.
Federal Rules of Criminal Procedure
Comments Regarding Other Misunderstandings Of The Law