United States v. Williams

UNITED STATES OF AMERICA v. JASON WILLIAMS AND NICOLE BURDETT

CRIMINAL ACTION NO. 20-55 SECTION "F"

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

October 8, 2020

ORDER AND REASONS

Before the Court is Jason Williams's and Nicole Burdett's motion to dismiss the indictment for selective and vindictive prosecution and due process violations, and their request for an evidentiary hearing. For the reasons that follow, the request for an evidentiary hearing is GRANTED, and the motion to dismiss the indictment is DENIED without prejudice.

Background

New Orleans City Council President and candidate for Orleans Parish District Attorney, Jason Williams is an African American public official and criminal defense attorney who runs his own law firm. Nicole Burdett, who is white, is Williams's law partner; she also handles administrative duties for Jason Rogers Williams & Associates. After a several years-long (and apparently ongoing and wide-ranging) non-tax-related federal criminal investigation into Mr. Williams, both he and Ms. Burdett were indicted on tax fraud charges. Independent of the defenses the defendants indicate they will advance to refute the substantive charges, Williams and Burdett claim that the decision to prosecute them is unduly selective and vindictive in violation of their constitutional rights to equal protection and due process. These are not defenses to the merits of the charges, but, rather, independent assertions that the federal tax fraud charges are being pursued for unconstitutional reasons.

Pre-Indictment/Federal Investigations

Jason R. Williams is an attorney and public official who presently serves as a Councilmember-At-Large for New Orleans City Council, the legislative branch of New Orleans City government. Councilman Williams recently qualified to run, and formally entered the race, for the office of District Attorney for Orleans Parish; the election is November 3, 2020. Councilman Williams heads his law firm, Jason Rogers Williams & Associates LLC, which focuses on criminal defense. Nicole E. Burdett is one of Mr. Williams's law partners. She also performs certain administrative functions for the firm.

Distinct federal investigations and their chronology are pertinent to the issues before the Court. Councilman Williams publicly declared his intent to run for District Attorney in approximately 2017-2018.¹ Since 2016, Mr. Williams has been -- and still is -- the target of what the prosecutors confirm is an "open and ongoing" federal investigation by the FBI into wide-ranging and undisclosed non-tax matters.² At least at its inception, the ongoing FBI investigation was overseen by prosecutors at the U.S. Attorney's Office for the Eastern District of Louisiana. At some point before July 24, 2018, prosecutors at the Western District of Louisiana became involved in the FBI investigation.

The IRS did not target Mr. Williams for criminal investigation until it attempted to interview him as a witness-client of anotherIRS target, Henry Timothy. The IRS investigation of Henry Timothy began as a result of an IRS criminal investigation of one of Timothy's other clients, C.D., who owned a home health company. IRS Special Agent Lori Marable investigated C.D. (and then Timothy). As for C.D., whom the government represents is "a black female," the IRS declined prosecution after SA Marable corroborated that the company paid its employment taxes, the company's gross income was correctly accounted for and accurately reported on its tax returns, and the amount of personal expenses in the business account was de minimis and did not meet prosecution guidelines.

So, although SA Marable declined to prosecute C.D., she decided to pursue charges against Timothy when she established that Timothy failed to declare all of his income from his tax preparation business for tax years 2013 through 2016.³ The government first approached Timothy as a target on May 15, 2018. While investigating Timothy, SA Marable contacted several of his clients to verify their identities and to verify that Timothy was their tax preparer. Jason Williams was one of Timothy's clientswhom SA Marable contacted in October 2018. She initially stopped by unannounced at his house; he asked her to contact his assistant and make an appointment, which she did. SA Marable went to Mr. Williams's office at the scheduled time on October 22, 2018. Mr. Williams not only kept her waiting, the government suggests, he failed to show up.⁴ SA Marable left after waiting for two hours. Mr. Williams tried to contact SA Marable to reschedule, but, strangely, he has not heard from her since. Instead, SA Marable's supervisor brought in another criminal tax investigator who set his investigatory sights on Mr. Williams as a target.

As the prosecutors tell it, "[b]ecause Williams failed to meet with SA Marable and due to the fact that he was a public official, SA Marable's supervisor required that IRS Special Agent Tim Moore get involved." SA Moore is also assigned to the FBI's public corruption squad and was aware that the FBI had an open investigation underway into Mr. Williams.

In December 2018, the prosecutors disclose, SA Moore conducted a preliminary tax investigation on Mr. Williams. He determined that a more extensive investigation was needed "due to the fact that he saw glaring irregularities on Williams' returns" and when he "learned of Williams' long history of tax liens for not paying his taxes."⁵ According to the prosecutors, one of the issues that SA Moore initially noticed was that, from 2013 through 2017, Williams's tax returns indicated that he made very little profit from his law firm and in 2017, his law firm reported a loss of $29,927. SA Moore also noticed that Mr. Williams's Schedule C (Profit and Loss from a Business) section of the return included expenses SA Moore deemed "excessive," and that Mr. Williams took deductions exceeding $100,000 for costs of goods sold; a deduction category typically reserved for businesses that manufacture goods or provide retail services.

According to discovery produced by the government, an IRS agent first appears on a subpoena in May 2019, shortly after Mr. Williams was visited by FBI and IRS agents on April 23, 2019. That same day, on April 23, 2019, FBI Agent Todd Goodson and IRS Agent Timothy Moore interviewed Henry Timothy about Jason Williams.According to the FBI 302⁶ for the April 23 interview, Timothy told the agents that he used spreadsheets and backup documents provided by Nicole Burdett to prepare Jason Williams's taxes. Timothy stated that he would provide a filing authorization to Ms. Burdett, she would return the authorization signed by Mr. Williams, and then he (Timothy) would file the returns. Nowhere in the FBI 302 does it indicate that Timothy said that Ms. Burdett would pressure him to take improper deductions. When the agents questioned Timothy about specific items on Mr. Williams's 2012-2107 tax returns, at no time did Timothy say that Ms. Burdett instructed him to take any of these deductions.

Three days after Timothy was interviewed by federal agents, Mr. Williams's attorney met with Timothy.⁷ Timothy made statementssimilar to those made to the agents on April 23, 2019: he stated that Ms. Burdett would bring him Mr. Williams's QuickBooks and other records, that he would prepare the tax returns and send a filing authorization to Ms. Burdett, and then he would file Mr. Williams's tax returns upon receipt of the authorization. Mr. Timothy stated that he (Timothy) made the decisions about what deductions should be taken, that he would ask Ms. Burdett for clarification if necessary, and that he did everything appropriately. Timothy stated that there was nothing unusual about Mr. Williams's taxes and the last thing he wanted to do was to get Mr. Williams in trouble.

During a second interview with federal agents along with the U.S. Attorney on November 5, 2019, Timothy initially repeated similar statements he made to the FBI in April 2019 -- that he reviewed Mr. Williams's records and determined what expenses could be deducted:

BURDETT was an attorney but was also the office administrator for WILLIAMS. BURDETT communicated withTIMOTHY by telephone and brought the QuickBooks details to TIMOTHY. The QuickBooks details were paper copies that included profit and loss statements, balance sheets, general ledger, and financials. If TIMOTHY had any questions, TIMOTHY called BURDETT and BURDETT would relay the questions to WILLIAMS. TIMOTHY also prepared BURDETT's personal taxes for tax years 2013 through 2017.

BURDETT retrieved the tax preparations from TIMOTHY including the tax forms 8879. BURDETT provided the items to WILLIAMS who then signed the tax forms 8879. BURDETT then returned the signed forms to TIMOTHY and TIMOTHY electronically filed the tax returns. TIMOTHY stated that there were no questions about the completed returns.

See Defense Ex. E, p. 2.⁸ During this 11/5/19 interview, Timothy took a break and, for some unexplained reason, met with his attorney in a private room. Once the interview resumes, Timothy changes his story.

When the interview resumes, the FBI 302 indicates:

TIMOTHY stated that BURDETT asked TIMOTHY to lower the amounts owed on the tax returns.

...

TIMOTHY felt he had a personal relationship with BURDETT and he needed to make WILLIAMS and BURDETT happy.

...

TIMOTHY did things he should not have done.

According to the defendants, the statements made by Timothy after meeting privately with his attorney during the 11/5/19 interview serve as the predicate for the prosecution theory. That the prosecution accepted Timothy's changed story "without verification" and contrary to the evidence indicates an improper prosecutorial motive. The defendants point to evidence that contradicts Timothy's changed story (thereby undermining the prosecution's theory). For example, post-indictment, in response to requests for production and admission sent to Timothy by defense counsel, Timothy...