United States v. Lucidonio

• Decision Date: 09 March 2022
• Docket Number: CRIMINAL 20-211
• Court: U.S. District Court — Eastern District of Pennsylvania
• Parties: UNITED STATES OF AMERICA v. ANTHNONY LUCIDONIO, SR. NICHOLAS LUCIDONIO

UNITED STATES OF AMERICA v. ANTHNONY LUCIDONIO, SR. NICHOLAS LUCIDONIO

CRIMINAL No. 20-211

United States District Court, E.D. Pennsylvania

March 9, 2022

MEMORANDUM

GERALD AUSTIN MCHUGH, UNITED STATES DISTRICT JUDGE

Defendants have moved to dismiss select counts of the Indictment. For the reasons that follow, the motion has been denied.

A. Standard of Review:

Under Federal Rule of Criminal Procedure 12(b)(3), a district court may review the sufficiency of an indictment to ensure “that legally deficient charges do not go to a jury.” United States v. Bergrin, 650 F.3d 257 268 (3d Cir. 2011). In so doing, the court must determine whether “the facts alleged in the indictment, if accepted as entirely true, state the elements of an offense and could result in a guilty verdict.” Id. An indictment is facially sufficient if it: “(1) contains the elements of the offense intended to be charged, (2) sufficiently apprises the defendant of what he must be prepared to meet, and (3) allows the defendant to show with accuracy to what extent he may plead a former acquittal or conviction in the event of a subsequent prosecution.” United States v. Vitillo, 490 F.3d 314, 320 (3d Cir. 2007) (citation omitted). “An indictment fails to state an offense if the specific facts alleged in it ‘fall beyond the scope of the relevant criminal statute, as a matter of statutory interpretation.'” Id. (citation omitted).

B. Count One adequately alleges a conspiracy to defraud the United States

As to Count One, the indictment is legally sufficient. It charges Defendants with violating 18 U.S.C. § 371, which criminalizes conspiracy (1) “to commit any offense against the United States” or (2) “to defraud the United States.” Defendants are charged with violating the second clause, commonly referred to as the “defraud clause.” For over a century, the Supreme Court has interpreted the defraud clause broadly. See Haas v. Henkel, 216 U.S. 462 (1910); Hammerschmidt v. United States, 265 U.S. 182, 188 (1924) (statute applies to conduct to “interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest.”). In United States v. Klein, the Second Circuit held that “obstruct[ing] one of [the IRS's] lawful governmental functions by deceit” is a crime under 18 U.S.C. § 371 and found sufficient evidence to support a § 371 conspiracy conviction based on twenty acts of concealment of income, including false statements on tax returns. 247 F.2d 908, 916 (2d Cir. 1957) (quoting Hammerschmidt, 265 U.S. at 188). The term “Klein conspiracy” has “become the generic term for a conspiracy to frustrate the government (particularly the IRS) in its lawful information gathering functions.” United States v. Alston, 77 F.3d 713, 717 n. 13 (3d Cir. 1996). See also United States v. McKee, 506 F.3d 225, 239 (3d Cir. 2007); United States v. Rankin, 870 F.2d 109, 113 (3d Cir. 1989) (listing necessary elements to establish conspiracy under § 371).^[1]

Here, Defendants argue that “Klein conspiracies, as currently construed, fall squarely within the category of offenses” decried as unconstitutionally void for vagueness in United States v. Davis, 139 S.Ct. 2319 (2019), because § 371 has been defined by courts, rather than Congress. Defs. Mot. Dismiss at 8, ECF 39. In support of this argument, Defendants cite United States v. Coplan, 703 F.3d 46, 59-62 (2d Cir. 2012), where the Second Circuit expressed some skepticism as to the continued viability of the traditional interpretation of § 371. Id. at 5-6. But the Court there ultimately upheld the validity of §371, holding that it was “bound to follow” “long-lived Supreme Court decisions” that have definitively adopted and reaffirmed the “expansive reading of § 371” given by courts. Coplan, 703 F.3d at 61-62; see also United States v. Atilla, 966 F.3d 118, 131 (2d Cir. 2020) (reaffirming holding in Coplan). So too is this Court bound.

Recognizing the breadth of § 371, the Third Circuit has counseled that, “[i]n considering a conspiracy under § 371, a court must be mindful . . . that there is a danger that prosecutors may use it arbitrarily to punish activity not properly within the ambit of the federal criminal sanction. Thus, indictments brought under § 371 must be carefully scrutinized.” United States v. Shoup, 608 F.2d 950, 955-56 (3d Cir. 1979). Having performed such scrutiny here, I conclude that the conduct alleged, a scheme directed towards concealing millions of dollars from the IRS, falls clearly and properly within the ambit of the statute. It must be noted that a person of reasonable intelligence would know that such behavior is likely to run afoul of the law, alleviating the core concern in any notice concerns discussed by the Supreme Court in Davis, 139 S.Ct. at 2325 (citation omitted) (“Vague laws contravene the ‘first essential of due process of law' that statutes must give people ‘of common intelligence' fair notice of what the law demands of them.”). There is some evidence of Defendants having such an understanding here, as the grand jury heard testimony from their accountant that after they became aware that family members had taken records showing underreporting, they proceeded to file amended tax returns.

The Defendants next argue that this Court should construe the defraud clause narrowly to avoid vagueness concerns by adopting the same nexus requirement articulated by the Supreme Court in Marinello v. United States, 138 S.Ct. 1101 (2018), when it considered what the defense seeks to characterize as a “similarly broad statute.” Defs. Mot. Dismiss, ECF 39 at 8. In Marinello, the Supreme Court overturned a defendant's conviction pursuant to the omnibus clause of 26 U.S.C. § 7212(a), holding that to demonstrate that a defendant obstructed or impeded “the due administration” of the IRS, the government must prove a nexus between the defendant's conduct and a particular administrative proceeding, such as an investigation, audit, or other targeted administrative action. Id. at 1109-10.

I find Marinello is distinguishable and decline to superimpose a nexus requirement upon § 371. The Court in Marinello focused upon specific statutory language, “due administration, ” that does not exist in § 371. As noted by another district court, the statutes are distinct: “§ 7212(a) forbids any obstruction of the due administration of the Internal Revenue Code, while § 371 forbids obstruction of the lawful function of the government by dishonest means.” United States v. Parlato, No. 15-CR-149-FPG, 2019 WL 988450, at *2 (W.D.N.Y. Mar. 1, 2019). The Marinello Court also attached significance to § 7212(a)'s unique statutory context and legislative history, which is wholly unrelated to § 371.

Three circuit courts have considered the issue and declined to limit §371 on the basis of Marinello. See United States v. Herman, 997 F.3d 251, 273-75 (5th Cir. 2021), cert. denied, 142 S.Ct. 787 (2022); United States v. Flynn, 969 F.3d 873, 879-80 (8th Cir. 2020), cert. denied, 141 S.Ct. 2853 (2021); United States v. Atilla, 966 F.3d 118, 131 (2d Cir. 2020). Given the longstanding Supreme Court precedent definitively adopting and reaffirming a broad reading of § 371 and the consensus among circuit courts, I am satisfied that Count One of the Indictment is legally sufficient.^[2]

C. Counts Four through Seven do not violate fundamental principles of aiding and abetting

The Government brings Counts Four through Seven pursuant to 26 U.S.C § 7206(2), which provides:

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.

The Defendants' challenge focuses upon two counts which charge each Defendant with aiding and assisting in the preparation and presentation of their own allegedly false income tax returns. See Indictment, ECF 1 at 12 (Counts 4-5 charging Anthony Sr. with “willfully aid[ing] and assist[ing] in” the preparation and presentation of an alleged false Form 1040 in his name for the years 2013 and 2014); id. at 13 (Counts 6-7 charging Nicholas Lucidonio with “willfully aid[ing] and assist[ing] in” the preparation and presentation of an alleged false Form 1040 in his name for the years 2013 and 2014).^[3]

Defendants argue that these counts must be dismissed to the extent that they have been charged with aiding and assisting in the preparation and presentation of their own allegedly false individual tax returns, because one may not be charged with aiding and abetting one's own conduct. Defendants argue that the conduct alleged in the indictment would only support charges under 26 U.S.C § 7206(1), which applies where a taxpayer signs and files a fraudulent return.

Defendants' argument is grounded in traditional principles of criminal aiding and abetting liability, as codified in 18 U.S.C § 2. See United States Department of Justice, Criminal Tax Manual, Chapter 13.03^[4] (describing § 7206(2) as the “Internal Revenue Code's ‘aiding and abetting' provision.”). As a general rule, a charge of aiding and abetting accuses a defendant of assisting in the unlawful conduct of another. See Third Cir. Model Jury Instructions, § 7.02; United States v. Provenzano, 334 F.2d 678, 691 (3d Cir. 1964); Jurista v. Amerinox Processing, Inc., 492 B.R. 707, 763 (D.N.J. 2013). Relying on these general principles, Defendants contend that § 7206(2) can only apply where there is another principal...