Tax Controversy Update for Week of 1/26/98
Supremes Just Say No to Exculpatory No - and Engage in Superfluous Digs
In Brogan v. United States, ___ U.S. ___ (1/26/98), reprinted at 1998 U.S. LEXIS 648, the Supreme Court rejected the exculpatory no spin on 18 U.S.C. Section 1001. Section 1001, you will recall, is the provision that makes it a felony (five years) to "knowingly" make any "false, fictitious or fraudulent statements or representations" to a government employee acting within the scope of his duty. The Supreme Court held, bottom-line, in Brogan that the sweep of the statute is very broad and does include any false statement just as the sweeping language of the statute seems plainly to indicate.
The fight in Brogan was over the so-called "exculpatory no" exception to the statute. Many courts had embraced the notion that there must be some limits to the sweeping scope of the statute in order that it not be an instrument of criminalization of the citizenry. I shall return to this notion below. The exception basically says that, if all the citizen (usually a target of a criminal investigation) does is to deny criminal conduct, he cannot be prosecuted under Section 1001. Of course, even under the exception as adopted by some courts, if the citizen goes beyond mere denial to state affirmative misrepresentations of any sort (e.g., he makes up an alibi in addition to denying the criminal conduct), the exculpatory no exception does not apply.
The Supreme Court took Brogan to resolve the conflict in the circuits -- between those which apply Section 1001 full bore and those which limit the bore via the exculpatory no doctrine. In adopting the former approach, the majority of the Supreme Court (led in its opinion by Justice Scalia, no friend to the fallen), the Court had some pithy comments (not persuasive perhaps, but certainly worth quoting) --
[Brogan] argues that a literal reading of 1001 violates the "spirit" of the Fifth Amendment because it places a "cornered suspect" in the "cruel trilemma" of admitting guilt, remaining silent, or falsely denying guilt. [citation omitted.] This "trilemma" is wholly of the guilty suspect's own making, of course. An innocent person will not find himself in a similar quandary (as one commentator has put it, the innocent person lacks even a "lemma," [citation omitted].
And even the honest and contrite guilty person will not regard the third prong of the "trilemma" (the blatant lie) as an available option.
Whether or not the predicament of the wrongdoer run to ground tugs at the heart strings, neither the text nor the spirit of the Fifth Amendment confers a privilege to lie.
So, in this environment, who would speak for the liar? That is merely to say, why did the courts prior to Brogan feel it necessary to create the exculpatory no exception to the otherwise stark language of Section 1001. Herein lies the problem.
Attorneys involved in a criminal practice know how easy it is for witnesses and targets (both of whom are subject to Section 1001) to deny misconduct when confronted and charged without warning. That does not make the denial commendable. But the human phenomenon gives the prosecutor or investigator a tremendous power to force a criminal violation of Section 1001 through artful questions designed to force the witness or target into a lie. Of course, we all know the witness or target can stand quiet, but that also is not human experience except for the most sophisticated (and well advised) of witnesses and targets. Given this phenomenon, the courts were concerned about prosecutorial misconduct -- creating the offense.
It was just this concern that prompted Justices Ginsburg and Breyer to write a separate concurrence, noting the sweeping language of Section 1001 and stating concerns as to its misuse by prosecutors. Essentially, the concurrence was written to encourage Congress to fix the problem. Justice Ginsburg's concurring opinion has some pithy quotes itself. Some are --
That encompassing formulation [of Section 1001] arms Government agents with authority not simply to apprehend lawbreakers, but to generate felonies, crimes of a kind that only a Government officer could prompt.
As these not altogether uncommon episodes [two 1001 horror stories] show, 1001 may apply to encounters between agents and their targets "under extremely informal circumstances which do not sufficiently alert the person interviewed to the danger that false statements may lead to a felony conviction." [citation omitted.] Because the questioning occurs in a noncustodial setting, the suspect is not informed of the right to remain silent. Unlike proceedings in which a false statement can be prosecuted as perjury, there may be no oath, no pause to concentrate the speaker's mind on the importance of his or her answers. As in Brogan's case, the target may not be informed that a false "No" is a criminal offense until after he speaks.
At oral argument, the Solicitor General forthrightly observed that 1001 could even be used to "escalate completely innocent conduct into a felony." Tr. of Oral Arg. 36. More likely to occur, "if an investigator finds it difficult to prove some elements of a crime, she can ask questions about other elements to which she already knows the answers. If the suspect lies, she can then use the crime she has prompted as leverage or can seek prosecution for the lie as a substitute for the crime she cannot prove."
If the statute of limitations has run on an offense -- as it had on four of the five payments Brogan was accused of accepting -- the prosecutor can endeavor to revive the case by instructing an investigator to elicit a fresh denial of guilt. Prosecution in these circumstances is not an instance of Government "punishing the denial of wrongdoing more severely than the wrongdoing itself," [citation omitted]; it is, instead, Government generation of a crime when the underlying suspected wrongdoing is or has become nonpunishable.
Even if the encompassing language of 1001 precludes judicial declaration of an "exculpatory no" defense, the core concern persists: "The function of law enforcement is the prevention of crime and the apprehension of criminals. Manifestly, that function does not include the manufacturing of crime."
Justice Stephens, with a concurrence by Justice Breyer, dissented, indicating a general agreement with much of Justice Ginsburg's concurring opinion but going further. Essentially, the dissent acknowledged the breadth of the statute but stated that the concerns of potential abuse of Section 1001 coupled with a broad acceptance of the exculpatory no doctrine as a response to the concerns supports not giving full bore fealty to the bare language of the statute. Justice Stephens (like even Justice Ginsburg in her opinion) simply did not believe that Congress intended the broad language to be so encompassing.
So now we have a new rule -- no exculpatory no's.
Finally, for those who would read the opinions, another theme comes through -- one of unusually sharp language by the justices (particularly Scalia) toward other justices who do not agree with their opinions. Thus, in Justice Scalia's majority opinion, rather than just stating dispassionately the considerations which persuade him and those who sided with him to hold as they did, they devote the last portion of the opinion to addressing the views of the dissenting judges in a way that appears less than dispassionate. Honing in on its view of the dissent's reliance on the acceptance of the exculpatory no doctrine, Justice Scalia states: "But the dissent does not propose, and its author has not practiced, consistent application of the principle * * * [citations omitted, but referring to previous decisions of the dissenting judge]." (Emphasis supplied.] The issue is, of course, not whether the author of a view (here Justice Stephens) has previously been inconsistent (consistency is, of course, the hobgoblin of small minds). Rather, the issue is whether the analysis provided is persuasive. Attacking the author of the analysis is irrelevant and counterproductive, and says more about the attacker than the attacked. Just as the justices deplore rambo litigation tactics by attorneys, so they should also clean up their acts and deal with the issues at hand without cute comments designed to inflame rather than inform.