U.S. v. Bowman

• Decision Date: 05 May 1999
• Docket Number: No. 98-3096,98-3096
• Citation: 173 F.3d 595
• Parties: -2219, 99-1 USTC P 50,510 UNITED STATES of America, Plaintiff-Appellee, v. David N. BOWMAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 595

173 F.3d 595

83 A.F.T.R.2d 99-2219, 99-1 USTC P 50,510

UNITED STATES of America, Plaintiff-Appellee, v. David N. BOWMAN, Defendant-Appellant.

No. 98-3096.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 15, 1998.

Decided May 5, 1999.

Robert E. Lindsay (briefed), Alan Hechtkopf (briefed), Frank P. Cihlar (argued and briefed), U.S. Department of Justice, Appellate Section Tax Division, Washington, DC, for Plaintiff-Appellee.

Paul Croushore, Cincinnati, OH, George C. Ford (argued and briefed), Norwalk, OH, for Defendant-Appellant.

Before: SILER and BATCHELDER, Circuit Judges; HOOD, District Judge. ^*

HOOD, District Judge.

Defendant-Appellant David N. Bowman appeals his August 2, 1996 conviction of one count of corruptly endeavoring to obstruct or impede the due administration of the Internal Revenue laws in violation of 26 U.S.C. § 7212(a), one count of filing false documents with the Internal Revenue Service in violation of 26 U.S.C. § 7206(1), and six counts of willfully failing to file income tax returns during the years 1989 through 1994 in violation of 26 U.S.C. § 7203. Bowman was sentenced to 33 months incarceration, a one-year period of supervised release, and a special assessment of $250.00. Bowman asks the Court to consider four issues. However, only two of these issues warrant extended discussion.

The initial issue is whether the government's attorney lacked the delegated authority to prosecute Count 1. The final issue is whether this Court's ruling in United States v. Kassouf, 144 F.3d 952 (6th Cir.1998), requires vacation of the conviction under Count 1.

BACKGROUND

Bowman's illegal activity began in 1989 when he failed to file his federal income tax return. This pattern of willful failure to file continued every year through 1994. The two felonies of which he was convicted flow from transmitting false 1099 tax forms to a number of mid-Ohio residents. Bowman embarked on this filing scheme after he failed at several attempts to settle his debts that arose from bad business decisions. Various financial institutions and individuals to whom Bowman owed money brought civil actions against him, some seeking foreclosure on collateral and others seeking judgments on unpaid notes. Several default judgments were awarded against Bowman as a result.

Bowman then instituted common law suits against these parties, claiming that they had violated Bowman's individual civil rights. Bowman would identify sections from Title 18 of the United States Code that pertained to these civil rights and totaled the fines which theoretically could be assessed against those institutions and individuals. Bowman would next send an IRS Form W-9, demanding the party's tax identification number, and later a "bill" for the fines Bowman alleged he was owed. A total of fifty-nine institutions and individuals received these forms. For obvious reasons, these "bills" were never paid. Bowman would then submit a so-called bill of forgiveness, asserting that the debt had been forgiven and thus had become compensation to the financial institutions and individuals. Bowman would then prepare the 1099 forms and file them with the IRS. All of the aforementioned activity took place between November 1989 and January 1990.

On or about January 31, 1990, Bowman filed an IRS form 1096 which summarized the information contained in the 1099 forms sent to the fifty-nine financial institutions and individuals. Copies of the 1099 forms were also sent to the Internal Revenue Service. It was the transmittal of this 1096 form, executed under penalty of perjury, which served as the factual predicate for Count 2 of Bowman's indictment.

After consulting an attorney, Bowman filed a request with the IRS to rescind the previously filed 1099 and 1096 forms, and to correct all records pertaining to said forms so that they may reflect the fact that the fifty-nine parties had received no compensation whatsoever from Bowman.

Bowman now appears before this Court seeking relief from his conviction under Count 1 and the calculation of his sentence by the district court. As previously noted, only Bowman's arguments regarding the Count 1 conviction deserve extended discussion.

ANALYSIS

I. Prosecutorial authority

Bowman's first issue on appeal is whether the prosecutor in his criminal case was properly delegated the authority to try Bowman on Count 1 of the indictment. This issue was presented to the district court in a motion to dismiss filed sixteen months after his August 2, 1996 conviction. Said motion was denied by the district court. This Court reviews a denial of a motion to dismiss de novo, as it is a purely legal question. See Wright v. Morris, 111 F.3d 414, 417 (6th Cir.1997), cert. denied, --- U.S. ----, 118 S.Ct. 263, 139 L.Ed.2d 190 (1997).

Mr. Dana J. Boente was the officer of the Department of Justice, Tax Division, who was appointed by the Assistant Attorney General, Tax Division, to try Bowman's case. ¹ 28 U.S.C. 515(a) states the following:

The Attorney General or any other officer of the Department of Justice, or any attorney specially appointed by the Attorney General under law, may, when specifically directed by the Attorney General, conduct any kind of legal proceeding, civil or criminal, including grand jury proceedings and proceedings before committing magistrates, which United States attorneys are authorized by law to conduct, whether or not he is a resident of the district in which the proceeding is brought.

The heart of Bowman's argument lies in whether Mr. Boente has the authority to prosecute under the omnibus clause of 26 U.S.C. § 7212(a). Bowman relies on 28 C.F.R. § 0.70(b) which provides a list of specific criminal proceedings which may not be handled by the Assistant Attorney General, Tax Division. Specifically, 28 C.F.R. § 0.70 does not permit the Assistant Attorney General, Tax Division, to prosecute, among other things, "corrupt or forcible interference with an officer or employee acting under the Internal Revenue laws." This quoted language refers to a portion of 26 U.S.C. § 7212(a), the statute under which Bowman was prosecuted in Count 1.

The government contends, and this Court agrees, that Mr. Boente did have the delegated power to prosecute Bowman under Count 1. Bowman was accused of violating the omnibus clause of 26 U.S.C. § 7212(a), which reads in relevant part that an individual may be prosecuted if he or she "obstructs or impedes, or endeavors to obstruct or impede, the due administration" of the internal revenue laws. It appears to this Court that Bowman misapprehends the meaning of the exception found in 28 C.F.R. § 0.70.

By its terms, 26 U.S.C. § 7212(a) reaches two different kinds of offenses. The first clause is aimed at endeavors to intimidate or impede an officer or employee of the United States, corruptly or by force of threat. See United States v. Mitchell, 985 F.2d 1275, 1277-78 (4th Cir.1993). The omnibus clause which follows is a " 'catch-all' clause aimed at other activities which may obstruct or impede the due administration" of Title 26. United States v. Kassouf, 144 F.3d 952, 955 (6th Cir.1998); see United States v. Williams, 644 F.2d 696, 699 (8th Cir.1981). This omnibus clause greatly expanded the reach of § 7212(a) in that grounds for prosecution are established if an individual using any means of corruption, force, or threat of force, undertakes the aforementioned prohibited acts. See United States v. Popkin, 943 F.2d 1535, 1539 (11th Cir.1991). Unlike the first clause of § 7212(a), under the omnibus clause, "the prohibited act need not be an effort to intimidate or impede an individual officer or employee." Id. at 1539.

Reading 28 C.F.R. § 0.70 in conjunction with 26 U.S.C. § 7212(a), Bowman's argument fails. By the express terms of the regulation, it is only the conduct of criminal proceedings "pertaining to ... corrupt or forcible interference with an officer or employee acting under the Internal Revenue laws" that is excluded from the authority delegated to the Assistant Attorney General, Tax Division. Therefore, the language of the regulation leaves all criminal proceedings under the omnibus clause within the authority of the aforementioned officer. This interpretation by the Court is confirmed by § 6-4.270 of the United States Attorneys' Manual. The Assistant Attorney General, Tax Division, was authorized to delegate such prosecution to Mr. Boente.

II. The effect of United States v. Kassouf

In United States v. Kassouf, 144 F.3d 952 (6th Cir.1998), this Court upheld the district court's decision to dismiss the charge that the defendant corruptly endeavored to obstruct and impede the due administration of the tax laws in violation of 26 U.S.C. § 7212(a). ² In the indictment, it was alleged that Kassouf, among other things, "used his partnerships and controlled corporate general partners in order to conduct transactions for his substantial personal benefit, without keeping records necessary to determine the tax consequences of those transactions." Id. at 953. It was further alleged that in order to make it more difficult for the IRS to discover and trace his activities, Kassouf "transfer[red] funds between bank accounts before making expenditures, and affirmatively misled the IRS by filing tax returns which failed to disclose the transactions the bank accounts and other assets, and the interest earned on those accounts." Id. While Kassouf was engaged in these activities, however, no IRS audit, investigation, or proceeding was underway. This Court then held that 26 U.S.C. § 7212(a) requires the government to allege as elements of the offense, that a defendant was aware of a pending IRS action while committing the prohibited conduct. Id. at 957, 960. The charge was dismissed.

Bowman argues that this Court's Kassouf decision merits reversal of the district court's decision denying his motion for acquittal of Count 1. The basic premise in Bowman's argument is that...