United States v. Rief
| Decision Date | 22 September 2021 |
| Docket Number | S1-4:20CR595 AGF (SRW) |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. RICHARD RIEF, Defendant. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Defendant's pretrial motions. Defendant Richard Rief is charged in a superseding indictment with multiple counts of failing to account for and pay over federal income, Social Security and Medicare taxes owing from his two companies, Med Plus Staffing, LLC (“MPS”) and Rief Healthcare (“RHC), and their employees, in violation of 26 U.S.C. § 7202. (Counts I - XIV). Defendant is also charged with two counts of willfully failing to file and pay personal income taxes from 2015 and 2016, in violation of 26 U.S.C. § 7203. (Counts XV and XVI). Defendant filed several motions related to the original and superseding indictments, primarily asserting that the bulk of the charges pertaining to taxes related to his companies are barred by the statute of limitations. All pretrial motions were referred to United States Magistrate Judge Stephen R. Welby under 28 U.S.C § 636(b). The Magistrate Judge issued a Report and Recommendation (“R&R”) on March 30, 2021 (Doc. No. 51), recommending that Defendant's motions be denied. Defendant filed objections to the R&R. After careful de novo review of the record, the R&R will be adopted.
The procedural background is detailed in the R&R. In summary on September 23, 2020, Defendant was charged with seven counts of willful failure to collect or pay over employment taxes, commonly known as “trust fund taxes, ” (Counts 1 - VII), and two counts of failure to pay personal income taxes. The dates with respect to the trust fund taxes ranged from the first quarter of 2014 to the first quarter of 2017. On December 9, 2020, Defendant filed a motion to dismiss the indictment or for a bill of particulars. (Doc Nos. 17 & 18). The motion primarily alleged that Counts I-VII were barred by the three-year statute of limitation. Defendant also asserted the indictment should be dismissed due to pre-indictment delay, in violation of Defendant's due process rights. An evidentiary hearing was held on January 21, 2021, at which the parties offered argument; no witnesses or evidence were presented. The Magistrate Judge thereafter requested post-hearing briefs regarding the proper accrual date for the charges.
Prior to the deadline for post-hearing briefs, the grand jury returned a superseding indictment which added seven more counts of failure to pay over the employment trust fund taxes related to Defendant's two businesses. It also corrected an error in the original indictment related to Count V, which had referenced the first quarter of 2014, and replaced it with Count VIII, related to the second quarter of 2017. (Doc No. 32). In the superseding indictment, the earliest time period at issue is in Count I, which asserts a charge related to the fourth quarter of 2014. The parties filed post-hearing briefs, and Defendant also requested leave to take the deposition of an IRS Revenue Officer, which request was denied. Following Defendant's arraignment on the superseding indictment, the parties were granted leave to file additional pretrial motions related to the superseding indictment.
In the superseding indictment, Defendant is charged in Counts I - XIV with willful failure to collect, account for, and pay over to the IRS federal income, Social Security and Medicare trust fund taxes related to MPS and RHC for various quarters ranging from the fourth quarter of 2014 through the first quarter of 2018, in violation of 26 U.S.C. § 7202. The indictment alleges that Defendant filed the Forms 940 and 941 reporting the tax due and owing, but that he failed to pay the taxes owed and withheld (totaling approximately $522, 270), except where necessary to convince the IRS to delay a levy or accept an installment agreement, all in violation of 26 U.S.C. § 7202. In Counts XV and XVI Defendant is charged with willful failure to pay personal income taxes for the years 2015 and 2016, in violation of 26 U.S.C. § 7203. (Doc. No. 32).
With respect to the superseding indictment, Defendant has filed a motion to dismiss and for production of witness materials. Defendant argues that Counts I-VIII and XII-XIV are barred by the three-year statute of limitations. He also seeks dismissal for pre-indictment delay, and for the production of grand jury testimony regarding the original Count V (now Count VIII) and the seven additional counts. (Doc. Nos. 45 & 46). The government opposed the motions (Doc. No. 47), and Defendant filed a reply.
In his R&R, the Magistrate Judge recommended that Defendant's motions to dismiss be denied, finding that a six-year, and not a three-year statute of limitations applied, and that all trust fund tax charges were brought within the application limitations period. The Magistrate Judge also rejected Defendant's assertions of pre-indictment delay, as Defendant failed to show the necessary prejudice. Finally, the Magistrate Judge rejected Defendant's requests for a bill of particulars and for further discovery. Defendant filed objections to the R&R, objecting to nearly all of the Magistrate Judge's conclusions (Doc. No. 52), and the government filed a response.
When a party objects to a Report and Recommendation in a criminal case, the court is required to make a de novo review determination of those portions of the record or specified proposed findings to which objection is made. United States v. Lothridge, 324 F.3d 599, 600 (8th Cir. 2003) (quoting 28 U.S.C. § 636(b)(1)). The Court conducted a de novo review of Defendant's motions, including a review of the hearing transcript. Based on that review, the undersigned concludes that the Magistrate Judge made proper factual findings and correctly analyzed the issues, and the Court adopts and incorporates the R&R.
For the reasons stated more fully in the R&R, the Court concludes that the trust fund charges arising under 26 U.S.C. § 7202 are not subject to dismissal based on the statute of limitations. The Court agrees that the trust fund charges are governed by a six-year statute of limitations, pursuant to 26 U.S.C. § 6531(4) (). As the Magistrate Judge notes, there is conflicting authority, and no binding Eighth Circuit precedent. In his objections, Defendant continues to rely on the district court decisions in United States v. Brennick, 908 F.Supp. 1004 (D Mass. 1995) and United States v. Block, 497 F.Supp. 629 (N.D.Ga. 1980) for application of a three-year limitations period. But appellate courts have rejected the reasoning in these cases. See United States v. Adam, 296 F.3d 327, 331-32 (5th Cir. 2002) (citing cases). As the R&R reflects, six circuit courts have held that the six-year statute of limitations in 26 U.S.C. § 6531(4) applies to all violations under 26 U.S.C. § 7202. See R&R, at 7. Like the Magistrate Judge, this Court is persuaded by reasoning of these cases, and finds the six-year statute of limitations applies. See, e.g., United States v. Blanchard, 618 F.3d 562, 568-69 (6th Cir. 2010) (collecting cases); United States v. Gollapudi, 130 F.3d 66, 70 (3d Cir. 1997).
As the government notes in its response to the objections, Defendant concedes that if the six-year statute of limitations applies, it is not necessary to determine the proper accrual date. The original indictment was filed within six years of the fourth quarter of 2014, the earliest quarter still alleged. And the new counts asserted in the superseding indictment were all brought within six years of the superseding indictment. Nevertheless, the Court also agrees with the Magistrate Judge's conclusion that for each of the quarters at issue in the superseding indictment, the limitations period does not accrue until April 15 of the succeeding calendar year, pursuant to 26 U.S.C. §§ 6531 and 6513(c). United States v. Habig, 390 U.S. 222, 225 (1968) ( “the net effect of the [§ 6513] language is to prolong the limitations period when, and only when, a return is filed or tax paid in advance of the statutory deadline”); United States v. Doll, 4:19CR3012, 2019 WL 4454415, at *4 (D. Neb. Aug. 30, 2019) (citing cases), report and recommendation adopted, 4:19CR3012, 2019 WL 4450691 (D. Neb. Sept. 17, 2019); United States v. Whatley, 2:09CR531DAK, 2010 WL 1236401, at *2 (D. Utah Mar. 9, 2010).
Defendant cites to allegations in the indictment suggesting Defendant was willfully collecting but refusing to pay over employee withholding taxes and spending money on personal items at various dates, and argues for accrual when willfulness is established. But the references in the indictment are nothing more than evidentiary allegations to support the willfulness of Defendant's conduct. See Blanchard, 618 F.3d at 569-70 (). Further Defendant's contention that the accrual date should turn on when facts exist showing willfulness would be difficult to apply, and would undermine the very purpose of 26 U.S.C. § 6513. ...
To continue reading
Request your trial