Daccarett-Ghia v. C.I.R.
| Citation | 70 F.3d 621 |
| Decision Date | 06 March 1996 |
| Docket Number | DACCARETT-GHI,A,No. 95-1029,95-1029 |
| Parties | , 76 A.F.T.R.2d 95-7761, 64 USLW 2365, 95-2 USTC P 50,626 Johnnylleged Alter Ego or Nominee of Friko Corporation, Appellant, v. COMMISSIONER OF INTERNAL REVENUE SERVICE, Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Isidoro Rodriguez, Barranquilla, Columbia, argued the cause and filed the brief for appellant.
Sally J. Schornstheimer, Attorney, United States Department of Justice, argued the cause for appellee, with whom Loretta C. Argrett, Assistant Attorney General, Gary R. Allen and Gilbert S. Rothenberg, Attorneys, Washington, DC, were on the brief.
Before: EDWARDS, Chief Judge, WALD and ROGERS, Circuit Judges.
Opinion for the Court filed by Circuit Judge WALD.
This case concerns the proper scope of the "fugitive disentitlement doctrine" in light of the Supreme Court's decision in Ortega-Rodriguez v. United States, 507 U.S. 234, 113 S.Ct. 1199, 122 L.Ed.2d 581 (1993). In the proceedings below, the Tax Court dismissed appellant's petition for redetermination of certain taxes that he allegedly owes the federal government. It did so because appellant has not appeared in a New Jersey federal court to answer a criminal indictment that involves the same funds as the tax obligation. We reverse. While we agree with the Tax Court's conclusion that the subject matters of the criminal and tax proceedings are related, Ortega-Rodriguez requires something more, a connection between appellant's failure to appear in the criminal matter and the conduct of the Tax Court's proceedings. In this case, however, there is nothing in the record to show that appellant's failure to appear has had any adverse effect either on the Tax Court institutionally or on appellee Commissioner of the Internal Revenue Service as a litigant. The Tax Court therefore had no authority to dismiss the petition.
In several cases, the Supreme Court has recognized that a court may dismiss a fugitive's criminal appeal. The first of these was Smith v. United States, 94 U.S. 97, 24 L.Ed. 32 (1876), in which the Court concluded that the appeal was essentially moot because any judgment would be unenforceable against the absent defendant. See also Eisler v. United States, 338 U.S. 189, 69 S.Ct. 1453, 93 L.Ed. 1897 (1949); Bonahan v. Nebraska, 125 U.S. 692, 8 S.Ct. 1390, 31 L.Ed. 854 (1887). Nearly one hundred years later, the Court in Molinaro v. New Jersey, 396 U.S. 365, 366, 90 S.Ct. 498, 498-99, 24 L.Ed.2d 586 (1970) (per curiam), reasoned that "[w]hile such an escape does not strip the case of its character as an adjudicable case or controversy, we believe it disentitles the defendant to call upon the resources of the Court for determination of his claims." Additional rationales for the fugitive dismissal were later set forth in Estelle v. Dorrough, 420 U.S. 534, 95 S.Ct. 1173, 43 L.Ed.2d 377 (1975), in which the Court rejected a constitutional challenge to Texas' fugitive-dismissal statute. The Justices sustained the statute on the grounds that it both discouraged escape and "promote[d] the efficient, dignified operation of the Texas Court of Criminal Appeals." Id. at 537, 95 S.Ct. at 1175-76.
None of those decisions, however, expressly articulated the underlying authority for this practice, which has come to be known as the fugitive disentitlement doctrine. The first, and only, Supreme Court decision to do so was Ortega-Rodriguez v. United States, 507 U.S. 234, 113 S.Ct. 1199, 122 L.Ed.2d 581 (1993). In that case, the Eleventh Circuit had dismissed the criminal appeal of an individual who, while he had been a fugitive at one point during the district court proceedings, was back in custody at the time he filed his appeal. The Supreme Court vacated and remanded the case. According to the Court, the fugitive disentitlement doctrine is not unlimited in scope, but extends only so far as a court's authority to control its own proceedings, which is both an inherent power and, in the federal circuit courts, embodied in Federal Rule of Appellate Procedure 47. The Court characterized Smith, Molinaro, and Estelle as cases in which dismissal was justified because the appellant's fugitive status had "some connection" to the appellate process. It further recognized that dismissal would be appropriate if the fugitive's status in some way prejudiced the government as a litigant by, for example, delaying any retrial, in which time the memory of prosecution witnesses could fade. The Eleventh Circuit, however, had not articulated any such connection between its proceedings and the appellant's status as a former fugitive, and therefore lacked authority to dismiss the appeal.
It is through the lens of Ortega-Rodriguez that we review the Tax Court's decision in this case.
Appellant Johnny Daccarett-Ghia is a citizen and resident of the Republic of Colombia. In February 1990, the United States government indicted him and several other individuals and corporations in the Federal District Court for the District of New Jersey on charges that they had conspired to launder the proceeds of drug sales. 1 A warrant was then issued for his arrest. Though he is aware of both the indictment and the warrant, Daccarett-Ghia has never traveled to the United States to answer them.
Seeking to seize funds in U.S. financial accounts that were allegedly deposited as part of the money-laundering scheme, the government filed civil forfeiture actions in the District of New Jersey and the Eastern District of New York. The New York district court eventually ruled, inter alia, that the government could not seize one of the accounts. See United States v. Daccarett, 6 F.3d 37, 59 (2d Cir.1993). Before the district court released the account to its corporate owner, however, appellee Commissioner of the Internal Revenue Service took control of it by issuing a Jeopardy Assessment, Levy, and Notice of Deficiency against appellant Daccarett-Ghia. In assessing Daccarett-Ghia's tax liability, the IRS's basic theory proceeds along the following lines: (1) deposits into the account represent the income of "Friko Corporation"; (2) Friko is in reality the "alter-ego"--i.e., a front--for Daccarett-Ghia, who is nominally its Chief Operating Officer; and (3) the funds are therefore Daccarett-Ghia's income, on which he failed to pay taxes. The assessed deficiency totaled $2,093,472, excluding interest.
In October 1992, Daccarett-Ghia petitioned the Tax Court for a redetermination of the deficiency. The Tax Court, however, promptly dismissed the petition without reaching the merits because it viewed him as a fugitive from the New Jersey criminal indictment. Daccarett-Ghia, Alter-Ego or Nominee of Friko Corp. v. Commissioner, Tax Ct.Dkt. No. 22854-92, 1994 WL 675537 (Dec. 5, 1994), vacated in relevant part and remanded, 26 F.3d 1139 (D.C.Cir.1994). Employing its standard practice in fugitive dismissal cases, the Tax Court noted that it would reopen the petition if Daccarett-Ghia appeared before the District of New Jersey within thirty days of its decision. Id. at 3-4.
While Daccarett-Ghia's appeal was pending, the Supreme Court issued its decision in Ortega-Rodriguez. A panel of this court then remanded this case to the Tax Court with instructions that it consider whether appellant's failure to appear in the outstanding criminal case had the requisite relationship to its proceedings. We explained:
There must be "some connection["] ... between the fugitive status of the litigant and the court invoking the doctrine. Here, it is not apparent what the connection was or what the Tax Court thought it was. The court whose "dignity" has been affronted, whose authority Daccarett-Ghia supposedly flouted, is--according to the Tax Court's analysis--the New Jersey federal court.
Friko Corp. v. Commissioner, 26 F.3d 1139, 1143 (D.C.Cir.1994) (emphasis added) (citation omitted). On remand, the Tax Court once again dismissed the petition. Daccarett-Ghia, Alter Ego or Nominee of Friko Corp. v. Commissioner, Tax Ct.Dkt. No. 22854-92, T.C.Memo. 1994-594, 1994 WL 675537 (Dec. 5, 1994). The Tax Court held "that there is a connection between the criminal charges pending against petitioner and the tax deficiencies," id. at 2, in that "the deficiencies ... are based on deposits to an account that petitioner allegedly used to 'launder' the proceeds of illegal drug sales," id. at 16. It further concluded that Ortega-Rodriguez was limited to Id. at 15. Therefore, "[s]ound policy concerns dictate that petitioner should not be permitted to selectively choose the benefits and burdens of the U.S. legal system that will apply to him." Id. at 16.
Once again, Daccarett-Ghia has appealed from the dismissal of his petition.
Before addressing the Tax Court's application of the fugitive disentitlement doctrine to these facts, we examine its power as an Article I court to invoke the doctrine in the first instance, as well as the standard by which this Article III court reviews its decision to do so.
Appellant contends that the Tax Court does not have authority to invoke the fugitive disentitlement doctrine. As a threshold matter, we note that appellant did not raise this issue until oral argument in the present appeal, and can be held to have waived it unless it raises a question of jurisdiction. Moreover, it bears noting that our previous decision in this case assumed that the Tax Court had that power, which may...
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