United States v. Hall

261 F.Supp.3d 812

UNITED STATES of America, Plaintiff,

v.Braint N. HALL, Defendant.

Case Number 16–20839

United States District Court, E.D. Michigan, Southern Division.

Signed August 9, 2017

Kenneth C. Vert, Department of Justice, Washington, DC, for Plaintiff.

OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS COUNT I OF THE SUPERSEDING INDICTMENT OR FOR A BILL OF PARTICULARS

DAVID M. LAWSON, United States District Judge

Defendant Braint N. Hall is charged in a nine-count superseding indictment with dodging his income tax obligations by not filing tax returns over multiple years and attempting to interfere with an Internal Revenue Service (IRS) investigation. The government alleges that Hall operated a janitorial services business under various names in an effort to conceal his ownership of the business, diverted customer payments to nominee companies, and lied to an IRS investigator about the business operations. Hall has filed a motion to dismiss count I of the superseding indictment, arguing that it fails to allege a crime and the clause of the statute, the so-called "omnibus clause" of 26 U.S.C. § 7212a, is unconstitutionally vague. Alternatively, Hall asks for a Bill of Particulars. The Court heard oral argument on the motion on June 20, 2017, and allowed the parties to file supplemental briefs thereafter. The government filed its brief, and the defendant's time for filing has lapsed. Although count I of the superseding indictment could have been drafted with more specificity, it alleges an offense under 26 U.S.C. § 7212a, a statute that is not void for vagueness. The discovery furnished by the government adequately fills the gaps in the government's allegations, obviating the need for a Bill of Particulars. Therefore, the defendant's motion will be denied.

I.

The grand jury alleged that Hall operated a janitorial business in Detroit from July 2001 through the present. Hall has operated his janitorial business under a variety of names including his own, Braint N. Hall Inc., Sunrise Janitorial Service, Sunrise Janitorial and Maintenance, Inc., and Detroit Industrial Cleaners. The government alleges that Hall has not filed an individual or corporate tax return with the Internal Revenue Service (IRS) since 2010. Nor has he filed United States corporation tax returns for the businesses that were under his control during the same time period.

The government alleges that the IRS started looking into Hall's failure to file his income tax returns in the spring of 2009. There is no suggestion, however, that Hall was notified of the investigation at that time. He was interviewed by an IRS officer on January 4, 2011, according to the superseding indictment. The subject of the interview was Hall's personal tax returns and those related to his janitorial business. The government alleges that Hall gave false statements to the IRS officer, but the superseding indictment does not specify how they were false. An IRS officer interviewed Hall again about his tax returns and janitorial business on June 13, 2011. The agent discussed the ownership of the business, the business' bank accounts, and the client relationships. The government alleges that the defendant gave false statements at that meeting as well but does not say how those statements were false.

The superseding indictment alleges that in February 2010, Hall caused a relative to incorporate Sunrise Janitorial and Maintenance, Inc. in order to hide Hall's control and ownership of his company. In March of 2011, Hall caused a relative to open a bank account for SJM. The government alleges that although the relative was the only person with signature authority, Hall controlled the disbursement of funds from that bank account. The government also alleges that in 2011 Hall transferred the janitorial business operations—employees, equipment, contracts—to Sunrise. Hall failed to issue W–2 and 1099 forms for Sunrise employees.

The superseding indictment also alleges that in August of 2010, Hall caused a relative to incorporate Detroit Industrial Cleaners in order to hide his control and ownership of that company. The government alleges that in 2015, Hall transferred his then-existing janitorial business to Detroit Industrial, and he failed to issue W–2 and 1099 forms to his employees and independent contractors. He also failed to file a corporate income tax return.

In count I of the superseding indictment, the grand jury charges that Hall violated 26 U.S.C. § 7212a because he "corruptly" tried "to obstruct and impede the due administration" of the tax laws by:

(1) making false and misleading statements about his janitorial business to the IRS; (2) causing a nominee to incorporate Sunrise Janitorial and Maintenance, Inc.; (3) causing a nominee to open a bank account in the name of Sunrise Janitorial and Maintenance, Inc.; (4) causing another nominee to incorporate Detroit Industrial Cleaners, Inc.; (5) causing Sunrise Janitorial and Maintenance, Inc. and Detroit Industrial Cleaners, Inc. to assume the business operations of [his] existing janitorial service including its employees, equipment[,] and client contracts; and (6) instructing customers of [his] janitorial business to pay Sunrise Janitorial and Maintenance, Inc. and Detroit Industrial Cleaners, Inc.

The defendant has moved to dismiss count I because it does not allege an investigation or proceeding that the defendant attempted to impede, and the applicable subsection of 26 U.S.C. § 7212a allegedly violated offends the Due Process Clause because it is vague.

II.

A.

A defendant may move under Federal Rule of Criminal Procedure 12(b)(3)(B)(v) to dismiss an indictment that "fail[s] to state an offense." An indictment does not state an offense adequately unless it alleges each element of the offense, " ‘fairly informs a defendant of the charge against which he must defend,’ " and " ‘enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense.’ " United States v. Anderson , 605 F.3d 404, 411 (6th Cir. 2010) (quoting Hamling v. United States , 418 U.S. 87, 117, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974) ). When assessing the sufficiency of the charge, the examination focuses on the indictment itself, and not on the underlying evidence of the crime. United States v. Landham , 251 F.3d 1072, 1080 (6th Cir. 2001) (citing Costello v. United States , 350 U.S. 359, 362–63, 76 S.Ct. 406, 100 L.Ed. 397 (1956) ; United States v. Powell , 823 F.2d 996, 999–1001 (6th Cir. 1987) ; United States v. Markey , 693 F.2d 594, 596 (6th Cir. 1982) ).

Section 7212a, Title 26, United States Code states:

Whoever corruptly or by force or threats of force (including any threatening letter or communication) endeavors to intimidate or impede any officer or employee of the United States acting in an official capacity under this title, or in any other way corruptly or by force or threats of force (including any threaten ing letter or communication) obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title, shall, upon conviction thereof, be fined not more than $5,000, or imprisoned not more than 3 years, or both, except that if the offense is committed only by threats of force, the person convicted thereof shall be fined not more than $3,000, or imprisoned not more than 1 year, or both. The term "threats of force", as used in this subsection, means threats of bodily harm to the officer or employee of the United States or to a member of his family.

(Emphasis added).

The Sixth Circuit has recognized that the statute contains clauses that define two means by which the crime can be committed. "The first clause is aimed at specific threats against an officer or employee acting in an official capacity, and the second clause is known as the ‘omnibus clause’ which is a ‘catch-all’ clause aimed at other activities which may obstruct or impede the due administration of the title." United States v. Kassouf , 144 F.3d 952, 955 (6th Cir. 1998). It is the second clause, italicized above, that is in play in this case.

The statutory language itself yields the elements of the crime. To be guilty of violating the omnibus clause of section 7212a, a defendant must (1) act "corruptly" or use "force or threats of force" (2) thereby "obstruct[ing] or imped[ing], or endeavor[ing] to obstruct or impede" (3) "the due administration of" the Internal Revenue Code. The Sixth Circuit has construed that last element as requiring proof of "some pending IRS action of which the defendant was aware," which "may include, but is not limited to, subpoenas, audits or criminal tax investigations." Kassouf , 144 F.3d at 957 & n.2. That view is not universally held. See United States v. Marek , 548 F.3d 147,150 (1st Cir. 2008) ; see also United States v. Marinello , 839 F.3d 209, 222 (2d Cir. 2016), cert. granted , ––– U.S. ––––, 137 S.Ct. 2327, 198 L.Ed.2d 755 (2017).

The year after Kassouf was decided, another panel of the Sixth Circuit attempted to limit it to its facts. United States v. Bowman , 173 F.3d 595 (6th Cir. 1999). In Bowman , the defendant was prosecuted under section 7212(a)'s omnibus clause after he attempted to prompt an IRS investigation into several of his creditors by filing forms with the IRS that falsely declared that his creditors had received certain taxable income. Id. at 596–97. Bowman argued that his conviction under the omnibus clause could not stand because there was no pending IRS action, as required under Kassouf . Id. at 599. The Sixth Circuit held "that Kassouf must be limited to its precise holding and facts." Id. at 600. The Bowman panel said that "an individual's deliberate filing of false forms with the IRS specifically for the purpose of causing the IRS to initiate action against a taxpayer is encompassed within § 7212(a)'s proscribed conduct." Ibid. And "unless Kassouf is limited to its facts, its effect would be to prevent the prosecution of actions whose sole purpose is to obstruct or impede...