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Pepperdine University School of Law

Friday, December 28, 2007

Galle on "The Tax Law Made Me Crazy" Defense Approved by the 9th Circuit in Cohen

Brian Galle (Florida State) shares his thoughts on the Ninth Circuit's decision on Wednesday in United States v. Cohen, No. CR-04-00119 (9th Cir. 12/26/07), granting a new trial on criminal charges against Lawrence Cohen, whom the opinion describes as an "acolyte" of "well-known recidivist tax protestor Irwin Schiff":

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The good news for the government was that, while Cohen will be entitled to a new trial, the Court (in a separate unpublished opinion) upheld the convictions and lengthy sentences of Schiff and another co-defendant, Cynthia Neun.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

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» CA9: Expert witness on mens rea of tax protester (and contempt) from Appellate Law
The Ninth Circuit blog points to United States v. Lawrence Cohen, __ F.3d __, 2007 WL 4485629 (9th Cir. Dec. 26, 2007). The defendant is one of those “crazy” tax protesters. Now, most of us refer to tax protesters as [Read More]

Tracked on Dec 31, 2007 8:30:15 AM

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