U.S. v. Rowlee

• Decision Date: 19 March 1990
• Docket Number: D,No. 581,581
• Citation: 899 F.2d 1275
• Parties: -973, 90-1 USTC P 50,189 UNITED STATES of America, Appellee, v. Elon Kevan ROWLEE, II, and the New York Patriots Society For Individual Liberty Association, Defendants-Appellants. ocket 88-1143.
• Court: U.S. Court of Appeals — Second Circuit

Page 1275

899 F.2d 1275

65 A.F.T.R.2d 90-973, 90-1 USTC P 50,189

UNITED STATES of America, Appellee, v. Elon Kevan ROWLEE, II, and the New York Patriots Society For Individual Liberty Association, Defendants-Appellants.

No. 581, Docket 88-1143.

United States Court of Appeals Second Circuit.

Argued Dec. 14, 1989.

Decided March 19, 1990.

Jersey M. Green, Denver, Colo. (Orten & Hindman, P.C., Denver, Colo., of counsel), for defendants-appellants.

Craig A. Benedict, Asst. U.S. Atty., N.D.N.Y., Syracuse, N.Y. (Frederick J. Scullin, Jr., U.S. Atty., N.D.N.Y., Syracuse, N.Y., of counsel), for appellee.

Before VAN GRAAFEILAND, PIERCE and MINER, Circuit Judges.

VAN GRAAFEILAND, Circuit Judge:

Elon Kevan Rowlee, II and The New York Patriots Society for Individual Liberty Association (the "Society") appeal from a judgment of the United States District Court for the Northern District of New York dated February 16, 1988, which followed a jury trial before Judge McCurn. The judgment convicted both defendants of conspiracy to defraud the United States by impeding the Internal Revenue Service in the collection of revenue, 18 U.S.C. Sec. 371, aiding and assisting the submission of false documents to the Internal Revenue Service, 26 U.S.C. Sec. 7206(2) (Rowlee on fourteen counts, the Society on twenty-four counts), and six counts each of mail fraud, 18 U.S.C. Secs. 1341 and 2. We affirm.

Rowlee formed the Society in 1980 and, shortly thereafter, began to work full-time as its executive director. The Society's activities dealt almost exclusively with promoting the evasion of taxes and the frustration of the work of the IRS. To attract interest and membership in the Society and his theories, Rowlee advertised in newspapers. The advertisements informed readers that payment of income taxes was voluntary, that the readers could "STOP THE THIEVIN IRS" from auditing one's taxes or charging one with failure to file, and that Rowlee could provide information on In courses conducted at Rowlee's home, students were taught that wages were not income and hence not subject to income taxation, that the filing of income tax returns was voluntary, that Title 26 of the United States Code never was enacted into law, and that money not tied to a gold standard had no value. Rowlee showed students how to prepare withholding exemption certificates (W-4 forms) in which they claimed exempt "wage earner" status. He provided handouts and step-by-step instructions on how to prevent employers from withholding both state and federal income taxes.

how to secure grand jury indictments against IRS agents. Through these advertisements and word of mouth, Rowlee found students for the Society's classes.

Upon completion of the courses, Rowlee invited the students to join the Society and to attend secret Society meetings. At these meetings, Rowlee sold W-4 packets, which included tax forms and legal memoranda purporting to justify wage-earner exemption claims. He also sold "interrogatories" which he claimed could stop an IRS audit, disable the IRS from prosecuting for failure to file, make a "liar and fool" out of the tax court, and set the ground work for obtaining an indictment against local IRS directors.

Outside of the meetings, Rowlee served as a tax adviser for ninety-two Society members, all of whom submitted false W-4 forms, failed to file returns, or did both. He maintained files on each client, in which he kept records of the IRS activity and copies of the correspondence which he prepared. His basic strategy in such cases was to ghost-author letters asking numerous questions of the IRS agent handling a case. The answers to these questions would prompt additional letters posing additional questions. This prolongation of correspondence, concerned, as it was, largely with irrelevant matters, was intended to impede the resolution of the case and to form the basis for a good faith mistake of law defense when IRS agents refused to respond specifically to each frivolous inquiry. Rowlee received cash payments for these services, which he did not record.

Rowlee's files contained numerous decisions interpreting the Constitution and the Internal Revenue Code on issues relevant to his conduct. Rowlee, himself, was involved in two of the cases, in both of which his theory that wages were not taxable as income was soundly rejected. See Rowlee v. Commissioner, 80 T.C. 1111 (1983), and Collorafi v. United States, No. 83 Civ. 1033 (E.D.N.Y. December 2, 1983). Rowlee's files also contained numerous letters from IRS officials stating and interpreting tax law.

Although there was some evidence that Rowlee had advised Society members to see an attorney or accountant before relying on his opinions, there was ample proof that members relied on Rowlee's teachings and instructions in filing exempt W-4 forms. The Government also proved that Rowlee urged Society members to file suits against the IRS and to make numerous Freedom of Information Act requests so as to waste the agency's time on frivolous matters and impede its functions.

Appellants' principal argument in both the district court and this court is that they were simply exercising their First Amendment right of free speech. Relying principally on the "incitement to imminent lawless action" holding of Brandenburg v. Ohio, 395 U.S. 444, 447-49, 89 S.Ct. 1827, 1829-31, 23 L.Ed.2d 430 (1969), ¹ they contend that the district court did not charge

the jury correctly concerning the nature and extent of their First Amendment right. We disagree. The district court's instructions with respect to the First Amendment differed with respect to each of the three statutory violations charged in the indictment. We find no reversible error in any of the three.

THE CONSPIRACY COUNT

Title 18, section 371, of the United States Code makes it unlawful for two or more persons to conspire to defraud the United States or any agency thereof. The district court did not err in instructing the jury that a First Amendment defense was not applicable to the charge of violating this statute, which, the court said, punishes the act of conspiracy and does not implicate speech. " 'It rarely has been suggested that the constitutional freedom for speech ... extends its immunity to speech or writing used as an integral part of conduct in violation of a valid criminal statute.' " New York v. Ferber, 458 U.S. 747, 761-62, 102 S.Ct. 3348, 3356-57, 73 L.Ed.2d 1113 (1982) (quoting Giboney v. Empire Storage & Ice Co., 336 U.S. 490, 498, 69 S.Ct. 684, 688, 93 L.Ed. 834 (1949)). Put another way, "[S]peech is not protected by the First Amendment when it is the very vehicle of the crime itself. E.g., ... 18 U.S.C. Secs. 371-372 (1964) (Conspiracy)." United States v. Varani, 435 F.2d 758, 762 (6th Cir.1970).

Appellants were convicted of the act of conspiracy, an act forbidden by section 371. Their conduct was not protected by the First Amendment merely because, in part, it may have involved the use of language. "[W]hen 'speech' and 'nonspeech' elements are combined in the same course of conduct, a sufficiently important governmental interest in regulating the nonspeech element can justify incidental limitations on First Amendment freedoms." United States v. O'Brien, 391 U.S. 367, 376, 88 S.Ct. 1673, 1678, 20 L.Ed.2d 672 (1968). See United States v. Daly, 756 F.2d 1076, 1081-82 (5th Cir.), cert. denied, 474 U.S. 1022, 106 S.Ct. 574, 88 L.Ed.2d 558 (1985). Appellants wisely do not challenge their convictions on the conspiracy count.

THE AIDING AND ASSISTING COUNTS

Section 7206(2) of Title 26 of the United States Code provides that any person who

[w]illfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document ... shall be guilty of a felony....

To understand the meaning and intent of this statute, it is necessary to examine the almost identical language contained in section 3793(b)(1) of the 1939 Act (53 Stat. 468) and section 1114(c) of the 1926 Act (44 Stat. 116). As the courts have interpreted these statutes, they make liable any person who willfully attempts to evade payment of either his own tax or that of any other person. Congress did not intend to exempt anyone from punishment who actively endeavors to defeat a tax, "whatever his relationship to the taxpayer [might] be." Tinkoff v. United States, 86 F.2d 868, 876 (7th Cir.), cert. denied, 301 U.S. 689, 57 S.Ct. 795, 81 L.Ed. 1346 (1937). As Judge Learned Hand pointed out in United States v. Kelley, 105 F.2d 912, 917 (2d Cir.1939), the purpose of these statutes was "to reach the advisers of taxpayers who got up their returns, and who might wish to keep down the taxes because of the credit they would get with their principals, who might be altogether innocent." In other words, a person who violates section 7206(2) as an adviser is not merely an aider and abettor, as that term commonly is understood. If he attempts to accomplish the evasion of a tax payment, he becomes as much a principal as the taxpayer who owes the tax. See United States v. Johnson, 319 U.S. 503, 514-15, 63 S.Ct. 1233, 1238-39, 87 L.Ed.

                1546 (1943).  In fact, the guilt or innocence of the taxpayer for whom the return was filed is irrelevant to the question of the adviser's guilt.   See United States v. Conlin, 551 F.2d 534, 536 (2d Cir.), cert. denied, 434 U.S. 831, 98 S.Ct. 114, 54 L.Ed.2d 91 (1977);  United States v. Jackson, 452 F.2d 144, 147 (7th Cir.1971);  United States v. Warner, 428 F.2d 730, 736 (8th Cir.), cert. denied, 400 U.S. 930, 91 S.Ct. 194, 27 L.Ed.2d 189 (1970);  United States v. Egenberg, 441 F.2d 441, 444 (2d Cir.), cert.

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