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United States v. Marinello

United States Court of Appeals, Second Circuit

October 14, 2016

UNITED STATES OF AMERICA, Appellee,
v.
CARLO J. MARINELLO, II, Defendant-Appellant.

          Argued: February 11, 2016

         Defendant-appellant Carlo J. Marinello, II appeals from an amended judgment of conviction entered against him on July 14, 2015 by the United States District Court for the Western District of New York (William M. Skretny, J.). One of the counts of conviction alleged a violation of 26 U.S.C. § 7212(a)'s "omnibus clause/ which criminally penalizes one who "corruptly . . . obstructs or impedes, or endeavors to obstruct or impede, the due administration of" the Internal Revenue Code in ways not addressed by other specific provisions of the statute.

         The district court denied Marinello's motion for an acquittal or a new trial on this count, concluding that the government was not required to establish a pending Internal Revenue Service action and a defendant's knowledge thereof as part of its burden of proof. We agree and conclude that these criteria are not offense elements under the omnibus clause. We further conclude that a violation of this provision may be predicated on an omission, and that the district court did not procedurally err in determining Marinello's sentence. The judgment of the district court is therefore:

          Joseph M. LaTona, Buffalo, NY, for Defendant-Appellant.

          Russell T. Ippolito, Jr., Assistant United States Attorney, Buffalo, NY, for William J. Hochul, Jr., United States Attorney for the Western District of New York, Appellee.

          Before: Pooler and Sack, Circuit Judges, and Failla, District Judge. [*]

          Sack Circuit Judge

         Defendant-appellant Carlo J. Marinello, II, a resident of Erie County in western New York State, owned and operated a freight service that couriered items to and from the United States and Canada. From approximately 1992 through 2010, Marinello neither kept corporate books or records nor filed personal or corporate income tax returns. Following an investigation by the Internal Revenue Service (the "IRS"), he was indicted by a grand jury sitting in the United States District Court for the Western District of New York on nine counts of tax-related offenses that allegedly occurred from 2005 through 2009. A jury found him guilty on all counts. He was sentenced to thirty-six months' imprisonment and one year of supervised release, and ordered to pay $351, 763.08 to the IRS in restitution.

         Under one of the counts of conviction, Marinello was charged with violating 26 U.S.C. § 7212(a). One portion of the statute imposes criminal liability on one who "corruptly or by force or threats of force . . . endeavors to intimidate or impede any officer or employee of the United States acting in an official capacity under this title" (i.e., the Internal Revenue Code). Id. Another portion, often referred to as the "omnibus clause, " imposes criminal liability on one who "in any other way corruptly . . . obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title." Id. Marinello was charged with violating the omnibus clause.

         On appeal, Marinello principally argues that we, like the Sixth Circuit addressing the same issue, should construe the phrase "the due administration of this title" in the omnibus clause to include only a pending IRS action of which a defendant was aware. He contends that his conviction under section 7212(a) cannot stand under this construction because the government offered no evidence at trial that he knew of a pending IRS investigation against him at the time of the actions on which the conviction was based. He also argues that a conviction under the omnibus clause cannot be premised on a defendant's omission, as it may have been in the case at bar, and that the district court committed procedural error during the sentencing proceedings.

         We exercise jurisdiction under 18 U.S.C. § 3742(a) and 28 U.S.C. § 1291, and affirm Marinello's conviction and sentence.

         BACKGROUND

         Factual Background

         In 1990, Marinello incorporated Express Courier Group/Buffalo, Inc. ("Express Courier"), a New York corporation. Express Courier maintained a freight service that couriered documents and packages between the United States and Canada. Despite owning and managing the company, Marinello maintained little documentation of his business income or expenses. He shredded or discarded most of the business's records, including bank account statements, employee work statements, gas receipts, and bills. Marinello paid his employees in cash and did not issue them (or himself) tax documents such as familiar Form 1099s or Form W-2s. He often used Express Courier's funds for personal purposes, including mortgage payments on his residence (made indirectly through weekly cash contributions to his wife) and monthly payments to his mother's senior living center.

         In December 2004, the IRS received an anonymous letter purporting to outline some of Marinello's business practices and accusing him of tax evasion. IRS Special Agent Angela Klimczak was assigned to investigate those allegations. Upon reviewing its own records, the IRS discovered that, from at least 1992 onward, Marinello failed to file personal or corporate income tax returns. Ultimately, Agent Klimczak recommended that the investigation be closed because the IRS could not at that time determine whether the unreported income was significant. Marinello had no knowledge of this investigation.

         In 2005, Marinello sought the advice of counsel, whom he informed of his failure to file his tax returns. Counsel told Marinello that this failure to file was improper and referred him to an accounting firm for a consultation. Allan Wiegley, a certified public accountant at that firm, told Marinello that he needed to provide records of business receipts and expenses in order to pay corporate taxes with respect to Express Courier and its business. Marinello was unable to do so: He had destroyed or failed to keep the documents.

         Marinello met with Wiegley again the following year to discuss a different matter. During the meeting, Marinello stated that he had made no progress in gathering Express Courier's business records. Wiegley declined to enter into a contract to perform accounting services for Express Courier or Marinello because there was inadequate documentation for him to prepare a corporate tax return. Despite the advice from counsel and two meetings with Wiegley, Marinello did not begin maintaining books and records for Express Courier.

         In each of the years 2005 through 2008, Express Courier had generated annual total gross receipts of between $200, 718.88 and $445, 184. During each of those years, Marinello took approximately $26, 000 to $50, 000 from Express Courier's business account and spent it in payment of his personal expenses.

         The IRS re-opened its investigation of Marinello in 2009. On June 1, 2009, Agent Klimczak conducted an interview of Marinello at his home. He told her that he could not recall the last time he had filed an income tax return. He initially maintained that he did not file tax returns because he thought they were not required for persons who made less than $1, 000 per year. He eventually admitted that he had earned more than that amount annually and should have paid taxes, but "never got around to it." Testimony of Angela Klimczak, August 6, 2014, Trial Transcript ("Trial Tr.») at 172 (App'x 181). He stated that he used business income (by cashing checks from Express Courier's customers and depositing a portion of them into his personal bank account) as well as his business bank account to pay for personal expenses. He confirmed that he shredded bank statements and that he did not keep track of Express Courier's income or expenses. He also remembered telling an accountant that he shredded most of his business records. Marinello explained that he destroyed these documents because "that's what [he had] been doing all along" and that he "took the easy way out." Id. at 194 (App'x 203).

         Procedural History

         On October 16, 2012, in the United States District Court for the Western District of New York, Marinello was charged in a superseding indictment with corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws, in violation of 26 U.S.C. § 7212(a) (Count One), and willfully failing to file individual and corporate tax returns for calendar years 2005 through 2008, in violation of 26 U.S.C. § 7203 (Counts Two through Nine). Count One alleged that Marinello had violated section 7212(a) by, "among other thing[s]":

(1)failing to maintain corporate books and records for [Express Courier] of which the defendant was an employee, officer, owner and operator;
(2)failing to provide the defendant's accountant with complete and accurate information related to the defendant's personal income and the income of Express Courier;
(3)destroying, shredding and discarding business records of Express Courier;
(4)cashing business checks received by Express Courier for services rendered;
(5)hiding income earned by Express Courier in personal and other non-business bank accounts;
(6)transferring assets to a nominee;
(7)paying employees of Express Courier with cash; and
(8)using business receipts and money from business accounts to pay personal expenses, including the mortgage for the residence in which the defendant resided and expenses related to the defendant's mother's care at a senior living center.

         Superseding Indictment, dated October 16, 2012, at 1-2 (App'x 75-76) (formatting altered).[1]

         Before trial, Marinello sought an instruction that "the jury . . . be unanimous on at least one of the means under which the government . . . alleged [that] [he] ha[d] violated [title 26 section 7212(a)]" in order to convict him of that offense. Defendant's Requested Jury Instruction, dated September 25, 2012, at 1 (App'x 41). If any juror harbored a reasonable doubt on any one of the means alleged, the instruction required an acquittal on Count One. Id. The government opposed this proposal as a misstatement of the law, contending that it was not required to prove all of the means specified in Count One.

         At a pre-trial conference, the district court (William M. Skretny, Judge) reserved ruling on the proposed jury instruction until trial. During that conference, Marinello's counsel represented that there was "no question [that Marinello] did not file his tax returns, corporate and personal, " and that he had advised Marinello "to take a plea" to Counts Two through Nine. See Transcript of pre-trial conference, October 4, 2012, at 2 (App'x 60). But Marinello declined to plead guilty to Count One, a felony. App'x 60-61.

         Marinello subsequently moved for submission to the jury of a special verdict form requiring the jury to indicate whether it found him guilty or not guilty regarding each of the eight means of violating section 7212(a) alleged in Count One of the superseding ...


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