139 F.3d 558 (7th Cir. 1998), 97-2939, United States v. Knottnerus

Docket Nº:97-2939.
Citation:139 F.3d 558
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Cornelius KNOTTNERUS, Defendant-Appellant.
Case Date:March 17, 1998
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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139 F.3d 558 (7th Cir. 1998)

UNITED STATES of America, Plaintiff-Appellee,


Cornelius KNOTTNERUS, Defendant-Appellant.

No. 97-2939.

United States Court of Appeals, Seventh Circuit

March 17, 1998

Argued Jan. 14, 1998.

Rehearing and Suggestion for Rehearing En Banc Denied April 15, 1998.

James M. Conway, Office of the United States Attorney, Criminal Division, Chicago, IL, Gil M. Soffer (argued), Office of the United States Attorney, Chicago, IL, for Plaintiff-Appellee.

Daniel T. Hartnett (argued), Martin, Brown & Sullivan, Chicago, IL, for Defendant-Appellant.

Before FLAUM, EASTERBROOK, and DIANE P. WOOD, Circuit Judges.

FLAUM, Circuit Judge.

By his own admission, Cornelius Knottnerus "fell under the influence of a tax protest movement" and failed to file income tax returns for the years 1987 through 1993. He tried to avoid criminal punishment for this misdeed by seeking the protections of the Internal Revenue Service's Voluntary Disclosure Policy in 1993. Under this program,

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the IRS agrees to send a recommendation against criminal prosecution for tax evasion to the Department of Justice (DOJ) Tax Division if a delinquent taxpayer voluntarily comes forward to pay overdue taxes and penalties. 1 Knottnerus contends that he complied with the program's requirements, but that the DOJ nevertheless commenced a prosecution against him for tax evasion at the IRS's recommendation. He claims that the IRS's failure to recommend nonprosecution violated its own internal rules, thereby violating his due process rights, and that his indictment therefore should have been dismissed. The district court refused to dismiss the indictment, and we affirm that decision.

Cornelius Knottnerus intentionally did not file tax returns for the years 1987 through 1993. During this period, Knottnerus received almost $369,000 in net taxable income from his residential construction business; he failed to pay approximately $116,000 in taxes due on this income. A grand jury began investigating Knottnerus's tax evasion in February 1993. The IRS assigned Special Agent Darrick Rhymes to the investigation.

Special Agent Rhymes traveled from Chicago to Knottnerus's home in Bristol, Wisconsin to photograph the residence on July 21, 1993. Knottnerus noticed this activity around his house, and he went over to greet the mysterious photographer. The two men shook hands as Knottnerus asked, "Can I help you?" Special Agent Rhymes thereupon identified himself as an IRS representative. At this point, Knottnerus said, "Okay, hold on," walked to a truck on his property, climbed into the truck, and sped away from the premises. Special Agent Rhymes ran to his car and called the IRS's base station in Chicago to report this contact with Knottnerus; Rhymes left nearly fifteen minutes later when it became apparent that Knottnerus would not be returning to continue their conversation.

Knottnerus contacted an attorney approximately one week after evading the IRS in this encounter. Through his attorney, Knottnerus informed the IRS that he wished to participate in the Voluntary Disclosure program. Knottnerus sent a letter to the IRS formally stating his desire to participate in...

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