United States v. Brown
| Decision Date | 27 January 2020 |
| Docket Number | 4:17-CR-40058 |
| Court | U.S. District Court — District of South Dakota |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. LOREN BROWN and RANDY L. GARRISS, Defendants. |
On July 6, 2017, Randy Garriss was indicted on Conspiracy to Defraud the United States, in violation of 18 U.S.C. § 371 and Impeding the Internal Revenue Service, in violation of 26 U.S.C. § 7212(a). Doc. 1. Pending before the Court are a Motion to Suppress, Doc. 151, a Motion to Dismiss Indictment, Doc. 175, and Motion to Modify the Text Order at Doc. 130, Doc. 197—all filed by Mr. Garriss. For the following reasons, Mr. Garriss's motions are denied.
On August 23, 2019, Mr. Garriss filed a motion to suppress seeking to "suppress any and all evidence obtained by administrative process after referral was made to the Department of Justice for criminal investigation." Doc. 151. Title 26, section 7602(c)(1) of the United States Code provides:
No summons may be issued under the Title, and the Secretary may not begin any action . . . to enforce any summons, with respect to any person, if a Justice Department referral is in effect with respect to such person.
Magistrate Judge Duffy ordered the Government to respond to "whether there ever was any evidence obtained by administrative process after a criminal investigation referral was made." Doc. 155.
The Government responded to Judge Duffy's order and stated in its brief that "we believe there is no evidence in this case that was obtained by administrative process after the referral was made to the [DOJ]." Doc. 156. The Government also opposed Mr. Garriss's motion because (1) the Defendant had not specified any evidence he believed falls within the category that he has identified; and (2) even if there were such evidence, the Defendant has cited no authority that would support suppression. Doc. 156 at 2. The Government argues that "as the moving party, at a minimum it is defendant's burden to come forth with some evidence and argument to support his position that evidence, statements, or a witness identification should be suppressed." Doc. 156 at 2 ().
Judge Duffy issued a Report and Recommendation recommending to the Court that the motion to suppress be denied as moot given the Government's belief that no evidence was obtained by administrative process after a criminal investigation referral was made. Doc. 157.
Mr. Garriss filed an objection to the Report and Recommendation. Doc. 161. Therein, Mr. Garriss states that he cannot determine what evidence may have been obtained by administrative process after a criminal investigation referral was made because the Government had not disclosed when referral for criminal prosecution was made to the Department of Justice. Doc. 161. Mr. Garriss has represented that in the many pages of discovery produced, there are many documents that were obtained administratively. Doc. 161 at 1.
Before the ruling on the Motion to Suppress, on October 7, 2019, the Court ordered the Government to file with the Court within ten (10) days of the date of the order, the date Mr. Garriss's case was referred to the Department of Justice for criminal prosecution and ordered Mr. Garriss to file a supplement to his motion to suppress within twenty (20) days after the Government filed its response, identifying what evidence he seeks to suppress. On October 15, 2019, the Government filed a response to the Court's order, stating that the Department of Justice, Tax Division, referred the case to the U.S. Attorney's Office, District of South Dakota, for criminal prosecution on March 17, 2017. Doc. 185. On November 4, 2019, Mr. Garriss responded to the Government's disclosure of the date of referral of this case for criminal prosecution. Doc. 188. Therein, Mr. Garriss did not identify what evidence he sought to suppress, but rather stated that he "has reason to believe that he was being criminally investigated with respect to matters surrounding the Nelsons (alleged co-conspirators) years prior to the dates submitted by [the Government]." Doc. 188 at 2. Mr. Garriss has not identified any summonses in this case that may have been issued after the referral was made for criminal prosecution in this case, nor has heidentified any evidence that he seeks to suppress. Accordingly, this Court adopts the report and recommendation issued by Judge Duffy, Doc. 157, and denies Mr. Garriss's motion to suppress, Doc. 151.
On September 27, 2019, Mr. Garriss moved to dismiss both count 1 and count 2 of the indictment charging him with Conspiracy to Defraud the United States, in violation of 18 U.S.C. § 371 and Impeding the Internal Revenue Service, in violation of 26 U.S.C. § 7212(a). Doc. 175.
In evaluating a motion to dismiss, the Court accepts the facts alleged in the Indictment as true. United States v. Halseth, 342 U.S. 277, 279 (1952). An indictment adequately states an offense if:
it contains all of the essential elements of the offense charged, fairly informs the defendant of the charges against which he must defend, and alleges sufficient information to allow a defendant to plead a conviction or acquittal as a bar to a subsequent prosecution. An indictment will ordinarily be held sufficient unless it is so defective that it cannot be said, by any reasonable construction, to charge the offense for which the defendant was convicted.
United States v. Hernandez, 299 F.3d 984, 992 (8th Cir. 2002) (citation omitted). An indictment is normally sufficient if its language tracks the statutory language. Hamling v. United States, 418 U.S. 87, 117 (1974).
A facially valid indictment ordinarily will survive a motion to dismiss for failure to state an offense without further inquiry. See United States v. Ferro, 252 F.3d 964, 968 (8th Cir. 2001). A court cannot dismiss an indictment based on "predictions as to what the trial evidence will be;" instead it must give the Government the opportunity to present its evidence. Id. (quoting United States v. DeLaurentis, 230 F.3d 659, 661 (3d Cir. 2000)).
Count 1 of the Indictment against Mr. Garriss charges him with violating 18 U.S.C. § 371 by conspiring with others to defraud the Internal Revenue Service ("IRS") in the function of ascertaining, computing, assessing, and collecting income taxes owed by Theodore "Ted" Nelson and Steven "Steve" Nelson, also known as a Klein conspiracy. Doc. 1. The Eighth Circuit has held that "[t]o convict a defendant of a Klein conspiracy, the government must show the existenceof an agreement to defraud the IRS and an overt act by one of the conspirators in furtherance of the agreement's objectives." United States v. Fletcher, 322 F.3d 508, 513 (8th Cir. 2003). Conspiracy to defraud the United States does not require proof of an agreement to violate a specific federal statute or regulation. United States v. Gjerde, 110 F.3d 595, 601 (8th Cir. 1997). Fraud covered by the statute "reaches 'any conspiracy for the purpose of impairing, obstructing or defeating the lawful function of any department of Government.'" Tanner v. United States, 483 U.S. 107, 126 (1987) (quoting Dennis v. United States, 384 U.S. 855 (1966)). "Defrauding" under § 371 means obstructing the operation of any government agency by any "deceit, craft or trickery, or at least by means that are dishonest." Hammerschmidt v. United States, 265 U.S. 182, 187 (1924); United States v. Murphy, 957 F.2d 550, 553 (8th Cir. 1992).
In his motion to dismiss, Mr. Garriss argues that an "[a]greement to conspire to defraud and impede the collection of taxes" owed by Ted Nelson and Steven Nelson "presume[s] the existence of taxes due and owing to the IRS." Doc. 175 at 3, 100. Mr. Garriss contends that a tax deficiency due and owing by Ted Nelson and Steve Nelson is an essential element of the charges against him. Mr. Garriss argues that because the federal government is without legal authority to tax the Nelsons, "[t]here is no tax deficiency" and both counts of the indictment must therefore be dismissed. Doc. 175 at 100.
"A conspiracy to frustrate or obstruct the IRS's function of ascertaining and collecting income taxes falls clearly within the ban of section 371." United States v. Rosengarten, 857 F.2d 76, 78 (2d Cir. 1988) (citing United States v. Klein, 347 F.2d 908, 915-19 (2d Cir. 1957); United States v. Everett, 692 F.2d 596, 599 (9th Cir. 1982)). In order to convict a defendant of conspiracy to defraud the United States under § 371, the Government need not prove an underlying tax deficiency due and owning by Ted and Steve Nelson. The Eighth Circuit Court of Appeals has stated that:
It is clear that a conspiracy to 'defraud the United States' within the meaning of 18 U.S.C. § 371 need not result in a monetary loss to the federal government. To conspire to defraud the Untied States means primarily to cheat the government out of property or money, but it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest. It is not necessary that the government shall be subjected to property or pecuniary loss by the fraud, but only that its legitimate official action and purpose shall be defeated by misrepresentation, chicane or the overreaching of those charged with carrying out the governmental intention.
United States v. Anderson, 579 F.2d 455, 458 (8th Cir. 19778) (citing Hammerschmidt v. United States, 265 U.S. 182 (1924); Dennis v. United...
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