Ninth Circuit Decides Schiff Appeal

[Dr. Caligari]

Howard Bashman links to the 9th Circuit's decision here:

http://howappealing.law.com/122607.html#030929

I haven't read the full decision yet, but, on a quick glance, it appears that Schiff's and Neun's main criminal convictions are affirmed; co-defendant Cohen's conviction is reversed and remanded for a new trial; and Schiff's extra year for criminal contempt is reversed, but remanded with the possibility of the judge reinstating 11 months of it.

[LPC]

The published opinion deals entirely with Cohen's conviction (which was vacated and a new trial ordered) and Schiff's 15 contempt convictions (which was vacated on a procedural issue and could be reinstated by the trial judge). Schiff's own conviction was affirmed in a separate unpublished memorandum, which reads as follows:

FILED
DEC 26 2007
CATHY A. CATTERSON, CLERK
U.S. COURT OF APPEALS

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
LAWRENCE COHEN,
Defendant - Appellant.
No. 06-10145
D.C. No. CR-04-00119-KJD

MEMORANDUM*

UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
IRWIN A. SCHIFF,
Defendant - Appellant.
No. 06-10199
D.C. No. CR-04-00119-KJD

UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
CYNTHIA NEUN,
Defendant - Appellant.
No. 06-10201
D.C. No. CR-04-00119-KJD

Appeal from the United States District Court
for the District of Nevada
Kent J. Dawson, District Judge, Presiding
Argued and Submitted November 5, 2007
San Francisco, California
Before: THOMAS, TALLMAN, and IKUTA, Circuit Judges.

Irwin Schiff and Cynthia Neun appeal various issues arising from their convictions following a jury trial, and Schiff appeals his sentence.[1] We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm as to all issues addressed here.

First, the district court did not err by failing sua sponte to hold a competency hearing for Schiff. The evidence before the district court did not raise a bona fide doubt as to Schiff’s competence to stand trial. See Odle v. Woodford, 238 F.3d 1084, 1087 (9th Cir. 2001). Although Schiff submitted reports from two doctors that he suffered from a delusional personality disorder, those reports do not establish any connection between Schiff’s delusional views about tax laws and his ability to understand the charges against him or to defend himself at trial. We are satisfied that the record shows Schiff was legally competent.

Second, Schiff’s waiver of the right to counsel was knowing, intelligent and unequivocal. See United States v. Arlt, 41 F.3d 516, 519-20 (9th Cir. 1994). At the first Faretta hearing, the magistrate judge extensively discussed with Schiff the nature of the charges against him, the possible penalties, and the dangers and disadvantages of self-representation. See United States v. Farhad, 190 F.3d 1097, 1098-99 (9th Cir. 1999). At the second Faretta hearing, Schiff vacillated between wanting a lawyer to represent him, wanting a lawyer to defend as to some but not all parts of the trial, wanting standby counsel, and wanting to represent himself without the assistance of standby counsel. He had the right under the Constitution to do so. Ultimately, Schiff made up his mind and chose the last option. We believe that his decision was the product of deliberation, not “caprice,” Adams v. Carroll, 875 F.2d 1441, 1445 (9th Cir. 1989), thoughtlessness, or “emotional outburst.” See United States v. Hernandez, 203 F.3d 614, 621 (9th Cir. 2000). Therefore, his waiver was valid.

Third, the district judge correctly denied Schiff’s motion to recuse. The motion was untimely, and there was no evidence that would cause “a reasonable person with knowledge of all the facts” to question the judge’s impartiality. Clemens v. U.S. Dist. Ct., 428 F.3d 1175, 1178 (9th Cir. 2005) (internal quotation marks omitted).

Fourth, we reject Schiff’s argument that the evidence against him was insufficient to support the guilty verdict. The evidence of his guilt was overwhelming, particularly the evidence that he intended to deceive the government through the use of “zero returns.” A reasonable finder of fact could conclude that each element of the crimes charged was established by the evidence
beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 319 (1979).

Fifth, the district court did not abuse its discretion in denying Neun’s motion to sever. Neun fails to point to a specific trial right that was compromised, or even to explain how she was prejudiced by the joint trial. See Zafiro v. United States, 506 U.S. 534, 539 (1993). She has demonstrated nothing more than an abstract possibility that the jury perceived a connection between Schiff’s courtroom antics and her defense that notwithstanding Schiff’s behavior, her erroneous views about federal income tax laws were sincerely held.

Sixth, the district court properly excluded a letter by a Nebraska attorney that purportedly endorsed Neun’s erroneous views that she was not violating the tax code. The letter was irrelevant because there was no evidence that Neun relied on it in forming her allegedly good faith belief in the legality of the zero return. Also, the letter posed a substantial danger of prejudice because it was written by an attorney and contained misstatements of the law.

Seventh, we find no error in the
district judge’s behavior at trial. Schiff argues that the district court waited too long to rule on certain pre-trial motions.
Virtually all of those motions were untimely, and with respect to the timely ones, the magistrate judge promptly recommended denial of the motions because they were frivolous. Although the district court did not actually adopt the magistrate judge’s recommendations until shortly before trial, Schiff could not have had a realistic expectation that the district court would reject the magistrate judge’s recommendations and hold, for example, that the Constitution does not grant Congress the power to impose direct income taxes. Moreover, Schiff failed to ask
for a continuance, and he fails on appeal to articulate how he was prejudiced by the delay.

Schiff is incorrect that he was prejudiced by the district judge’s “intemperate remarks.” With one exception, all of those remarks occurred outside the presence of the jury and therefore could not have prejudiced Schiff. Only one allegedly intemperate remark occurred in the jury’s presence, and that remark was not inappropriate. Even if it was, the error was harmless.

The district judge did not err in briefly questioning a government witness. The questions posed do not demonstrate judicial bias and even if they did, any error was harmless. See Kennedy v. Los Angeles Police Dep’t, 901 F.2d 702, 709 (9th Cir. 1990) (overruled on other grounds). The district judge did not err by giving a sua sponte mid-trial instruction to the jury. There is no rule barring midtrial jury instructions, and the instruction at issue accurately states the law.

Finally, Schiff’s sentence is not unreasonable. The record shows that the district court considered in depth all of the relevant factors listed in 18 U.S.C. § 3553(a), including Schiff’s mental health. The district court was not required to mention the role Schiff’s age played in the calculation of his sentence. See United States v. Mix, 457 F.3d 906, 912 (9th Cir. 2006).

AFFIRMED.

[Footnotes]
* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.

1 This memorandum disposition does not address any issues raised by Appellant Lawrence Cohen. His conviction is reversed and his sentence is vacated for reasons discussed in the accompanying published opinion. Nor does this memorandum disposition address Schiff’s fifteen criminal contempt convictions and the sentences he received for those convictions. Those convictions and sentences are addressed in the accompanying published opinion. There, we vacate the contempt convictions and remand to allow the district court to appropriately certify the contumacious behavior under Federal Rule of Criminal Procedure 42(b) before re-imposing Schiff’s convictions and punishment.

[LPC]

The 9th Circuit docket also contains the following order:

11/14/07
Filed order (Sidney R. THOMAS, Richard C. TALLMAN, Sandra S. IKUTA): On 9/25/07, we ordered attorney Sheldon R. Waxman to show cause why he should not be sanctioned for attempting to raise frivolous issues on appeal, such as whether the payment of federal income taxes is voluntary. Waxman made these arguments on behalf of his client, Irwin Schiff, in a thirty-five page unauthorized Supplemental Opening Brief. We conclude that Waxman has failed to show sufficient cause to justify his conduct, and we sanction him in the amount of $1000. (cite). The sanction is imposed as a judgement and shall be paid to the Clerk of this Court within 21 days after the filing date of this order. Failure to comply with this order may result in the imposition of additional sanctions on counsel as well as referral of this judgement to the United States Attorney for collection. Within 21 days after the filing date of this order, Waxman shall also serve a copy of this order on every bar to which he is admitted and to every court before which he is authorized to proactice, and provide thie Court with an affidavit showing that he has done so. The Clerk shall serve this order by certified mail (return receipt requested). IT IS SO ORDERED. [06-10199, 06-10145, 06-10201] (hc) [06-10145 06-10199 06-10201]

According to the docket, Waxman sent a letter of protest, but paid the sanctions on 11/29.

[Dr. Caligari]

Interesting commentary on the Cohen reversal, from the Tax Prof blog:

Jim Maule's comment (on the TaxProf listserv) that "'The tax law made me crazy' might become the standard and unavoidable defense to every criminal tax fraud prosecution from this day forward" sounds like a good joke, but it might not be that far from a good description of the jurisprudential result of Cohen. The Cohen opinion reversed the conviction of Larry Cohen, a flunky and co-defendant of Erwin Schiff, the famed tax "protester," on the ground that the district court improperly excluded psychiatric testimony that Cohen averred would have tended to show he was not capable of knowing that his conduct was illegal. Although ignorance is usually no excuse for breaking the law, "willfulness" -- knowledge that one's acts are contrary to controlling law -- is an element of most tax offenses. See Cheek v. United States, 498 U.S. 192 (1991).

The good news for the government was that, while Cohen will be entitled to a new trial, the Court (in a separate unpublished opinion) upheld the convictions and lengthy sentences of Schiff and another co-defendant, Cynthia Neun.

That's not to say I'd rest on my laurels if I were the Government. (Disclaimer: I litigated this appeal at its early stages (writing the briefs opposing bail pending appeal) on behalf of DOJ before departing for FSU.) For those who haven't read it, the Ninth Circuit's opinion holds that psychological testimony that a defendant was "unusually rigid" in his thinking should have been admitted to negate evidence of willfulness. In effect, according to the Court, evidence that someone was resistant to accepting views contrary to their own is probative of whether that person knew of the existence of those contrary views. This holding followed closely from a similar, earlier 9th Circuit ruling in a fraud case.

To my mind, evidence that an individual is, in effect, exceptionally stubborn or close-minded is at most an explanation for why that person maintains her beliefs, not proof that the person does not know of the alternatives. No matter how many times I watch Bill O'Reilly, he still won't convince me, but that is not to say that I am unaware of O'Reilly's views. Similarly, even though here Cohen refused (perhaps pathologically) to accept the correctness of the views of the IRS and various federal courts, that refusal does not prove -- indeed, it tends to disprove -- his ignorance of those views. And in order to win acquittal Cohen must show his ignorance of what the law holds, not his disagreement with it.

Thus, if I were the Government, I might seek further review of the Cohen opinion, because its underlying logic is, as Jim points out, all too appealing to tax protesters everywhere. The Cohen logic seemingly could be broadened to all those who refuse to obey the tax laws, each of whom might claim that their belief that the Tax Code *normatively* should be interpreted in conformity to their views implies that they do not "know," in the Cheek sense, that the IRS and courts descriptively do not do so.

Finally, the result here is something of an object lesson in the perils of trial practice. Jim's description is really not that far off. You don't get much sense of it from the Ninth Circuit's opinion, but the expert report at issue really did amount to not much more than, "Boy, you'd have to be crazy to believe this tax protester stuff. I guess this guy is crazy." Unfortunately, trial counsel (not me -- I was appellate counsel) convinced the trial court to exclude it, anyway, leading to this adverse opinion for the Government. If DOJ had made a different strategic decision, they might have simply let the evidence in, knowing it was exceedingly unlikely to sway a jury. But, on the other hand, there's no appealing a not-guilty verdict, so it's hard to fault for me to fault my colleagues at the trial level for being risk averse.

http://taxprof.typepad.com/taxprof_blog ... he-ta.html

[grixit]

Your Honor, I have here a psychological evaluation showing that my client is unusually rigid in his beliefs concerning the murder laws and therefor cannot be considered a willful violator. He is honestly convinced that jews are not included in the definition of "human being".

[The Observer]

Your Honor, I have here a psychological evaluation showing that my client is unusually rigid in his beliefs concerning the murder laws and therefor cannot be considered a willful violator. He is honestly convinced that jews are not included in the definition of "human being".

Somehow I don't think that defense would have worked at Nuremberg.

[Famspear]

Brian Galle wrote:

Similarly, even though here Cohen refused (perhaps pathologically) to accept the correctness of the views of the IRS and various federal courts, that refusal does not prove -- indeed, it tends to disprove -- his ignorance of those views. And in order to win acquittal Cohen must show his ignorance of what the law holds, not his disagreement with it.

Good point. The issue should be couched in terms of "awareness" versus "ignorance."

The Supreme Court in the Cheek case in 1991 was helpful in distinguishing between (A) belief about the constitutionality of the law (which is not a valid defense on the issue of willfulness, even if a true belief), and (B) for example, an actual good faith belief that wages are not taxable based on a misunderstanding caused by the complexity of the Code (which is a valid defense in an applicable case).

However, I have often thought that the Supreme Court in Cheek could have done a better job of clarifying this whole area once and for all by simply avoiding the word "belief" altogether, and by instead concentrating on the concept of "awareness" (versus ignorance) of the EXISTENCE of the statute or reg (or awareness of what the statute or reg says).

Under my formulation, "actual awareness that one is violating the tax law" would be defined as something like "awareness of the existence of the law," or "awareness of what the law says," or (for example) "awareness that the courts do not agree with the applicable (fill in the blank) tax protester position on what the law means," or something like that. For example, if the protester is aware of the what the courts have ruled, he should be considered "aware" (willful). He is aware, for example, if he is aware of what the Code says and aware that he is not following the courts' interpretations -- even if he actually believes that "the Code is not really a valid law," or even if he actually believes that "the courts are incorrect." I contend that the courts have needlessly confused the "awareness" analysis with the use of the word "belief."

[Famspear]

Just to follow up, recall that the formulation for willfulness was "the voluntary, intentional violation of a known legal duty." See Cheek v. United States, 498 U.S. 192, at 196 (1991). By concentrating on the word "known" we arrive more directly at the concept of "awareness," and not the concept of "belief."

The example I have previously given in another forum is the one where a boy is standing on a railroad track. A friend off to the side yells, "Hey watch out, a train is coming."

In response, the boy (who we will assume is mentally competent) looks down the track and sees the train but, because of his poor vision, incorrectly believes the object moving toward him is a horse. The boy says, "Well, that sounds like a train, but it looks like a horse. No, that's just a horse."

Under my analysis, the fact that the boy honestly believes the object is not a train does not negate his awareness of the train. Indeed, he has provided evidence of his awareness of the train by DENYING that it is a train.

[Truthstalker]

Just to follow up, recall that the formulation for willfulness was "the voluntary, intentional violation of a known legal duty." See Cheek v. United States, 498 U.S. 192, at 196 (1991). By concentrating on the word "known" we arrive more directly at the concept of "awareness," and not the concept of "belief."

The example I have previously given in another forum is the one where a boy is standing on a railroad track. A friend off to the side yells, "Hey watch out, a train is coming."

In response, the boy (who we will assume is mentally competent) looks down the track and sees the train but, because of his poor vision, incorrectly believes the object moving toward him is a horse. The boy says, "Well, that sounds like a train, but it looks like a horse. No, that's just a horse."

Under my analysis, the fact that the boy honestly believes the object is not a train does not negate his awareness of the train. Indeed, he has provided evidence of his awareness of the train by DENYING that it is a train.

So, what happened, did the boy get off the tracks in time?

[Quixote]

However, I have often thought that the Supreme Court in Cheek could have done a better job of clarifying this whole area once and for all by simply avoiding the word "belief" altogether, and by instead concentrating on the concept of "awareness" (versus ignorance) of the EXISTENCE of the statute or reg (or awareness of what the statute or reg says).

The Supreme Court wrote of awareness of a duty, but the context shows they meant belief that a duty existed, not just awareness of the existence of a statute that someone else believed imposed a duty. They said that knowledge was but one component of what the government had to prove to show willfulness. "In such a case, if the Government proves actual knowledge of the pertinent legal duty, the prosecution, without more, has satisfied the knowledge component of the willfulness requirement. But carrying this burden requires negating a defendant's claim of ignorance of the law or a claim that, because of a misunderstanding of the law, he had a good-faith belief that he was not violating any of the provisions of the tax laws." 498 US 192, 201

[LPC]

Just to follow up, recall that the formulation for willfulness was "the voluntary, intentional violation of a known legal duty." See Cheek v. United States, 498 U.S. 192, at 196 (1991). By concentrating on the word "known" we arrive more directly at the concept of "awareness," and not the concept of "belief."

There is other language in the Cheek opinion that would support that point of view.

Of course, the more unreasonable the asserted beliefs or misunderstandings are, the more likely the jury will consider them to be nothing more than simple disagreement with known legal duties imposed by the tax laws, and will find that the Government has carried its burden of proving knowledge.

United States v. Cheek, 498 U.S. 192, 203-204 (1991).

In that sentence, the Supreme Court seems to recognize that there is a difference between a "disagreement" with the tax laws and whether the tax laws are "known." If the government can prove that the defendant was aware that the IRS expected a return to be filed, and that the courts had enforced the requirement to file a return, the fact that the defendant disagrees with the IRS and the courts does not prevent the jury from convicting.

But it's still a question for the jury.

The issue raised by the Cohen case is whether the emotional or mental state of the defendant is relevant to the issue of whether the defendant was aware of the legal duty or whether the violation of the legal duty was volitional. If willfulness is a subjective determination, then expert testimony showing that (a) the defendant was delusional and incapable of knowing what was or was not a legal duty, or (b) the defendant was emotionally incapable of complying with the legal duty (so his violation of the legal duty was not intentional), might be relevant.

I have to admit I have a lot of misgivings about this kind of insanity defense, if for no other reason than that most of the defendants who want to use it are not insane about anything except taxes.

[Question everything]

Just to follow up, recall that the formulation for willfulness was "the voluntary, intentional violation of a known legal duty." See Cheek v. United States, 498 U.S. 192, at 196 (1991). By concentrating on the word "known" we arrive more directly at the concept of "awareness," and not the concept of "belief."

The example I have previously given in another forum is the one where a boy is standing on a railroad track. A friend off to the side yells, "Hey watch out, a train is coming."

In response, the boy (who we will assume is mentally competent) looks down the track and sees the train but, because of his poor vision, incorrectly believes the object moving toward him is a horse. The boy says, "Well, that sounds like a train, but it looks like a horse. No, that's just a horse."

Under my analysis, the fact that the boy honestly believes the object is not a train does not negate his awareness of the train. Indeed, he has provided evidence of his awareness of the train by DENYING that it is a train.

So, what happened, did the boy get off the tracks in time?

Is the boy Gene Chapman? Sure sounds like him.

[LPC]

I was looking at Schiff's website today, and noticed the statement that "Irwin Schiff is available for personal consultations." That needs updating.

[Joey Smith]

I was looking at Schiff's website today, and noticed the statement that "Irwin Schiff is available for personal consultations." That needs updating.

Not really; it just needs the addendum "from 10:30a to 10:45a Saturdays only. Now accepting smokes."