United States v. Sun Myung Moon, S 81 Cr. 705 (GLG).

• Decision Date: 01 March 1982
• Docket Number: No. S 81 Cr. 705 (GLG).,S 81 Cr. 705 (GLG).
• Citation: 532 F. Supp. 1360
• Parties: UNITED STATES of America, Plaintiff, v. SUN MYUNG MOON and Takeru Kamiyama, Defendants.
• Court: U.S. District Court — Southern District of New York

532 F. Supp. 1360

UNITED STATES of America, Plaintiff, v. SUN MYUNG MOON and Takeru Kamiyama, Defendants.

No. S 81 Cr. 705 (GLG).

United States District Court, S. D. New York.

March 1, 1982.

COPYRIGHT MATERIAL OMITTED

William M. Tendy, Acting U. S. Atty., S. D. N. Y., New York City, Atty. for plaintiff; Jo Ann Harris, Senior Litigation Counsel, Martin Flumenbaum, Asst. U. S. Atty., New York City, of counsel.

Stillman, Friedman & Shaw, New York City, Caplin & Drysdale, Washington, D. C., for defendant Moon; Charles Stillman, Julian Friedman, New York City, Bernard Bailor, Washington, D. C., of counsel.

Andrew M. Lawler, New York City, for defendant Kamiyama.

OPINION

GOETTEL, District Judge:

The Reverend Sun Myung Moon is the founder and spiritual leader of the Unification Church, a church with approximately two million members in 120 countries around the world.¹ Takeru Kamiyama is a member of the Unification Church and an advisor to Moon. The Holy Spirit Association for the Unification of World Christianity (HSA-UWC) is the corporate embodiment of the Unification Church in the United States. HSA-UWC was incorporated in 1961 as a California not-for-profit corporation and was granted tax exempt status by the Internal Revenue Service (IRS) in 1963. At the times relevant to the present case, the activities of the Unification Church in New York State were conducted by a separate entity, the Unification Church of New York (UCNY). UCNY began as an unincorporated association and later became incorporated as a New York not-for-profit corporation.² HSA-UWC assumed the responsibilities of UCNY in 1976.

On October 15, 1981, a federal grand jury indicted Moon on charges of making and subscribing false federal income tax returns in 1973, 1974, and 1975, conspiracy to file false returns, and conspiracy to obstruct the investigations of these tax returns being conducted by the federal grand jury and the United States Attorney. These charges revolve around checking and savings accounts at the Chase Manhattan Bank, in Moon's name, in which $1.6 million was allegedly deposited from March 1973 through December 1975 and $50,000 of stock in Tong 11 Enterprises, a company that imports ginseng tea and other merchandise from Korea. The Government alleges that these accounts and stock were owned by Moon personally and that he failed to report the receipt of this stock and the interest earned on the bank accounts as taxable income on his tax returns. The Indictment also names Kamiyama in the conspiracy and separately charges him with aiding and abetting in the preparation and presentation of Moon's allegedly false tax returns, obstruction of justice, causing false documents to be submitted to the United States Department of Justice, and giving false testimony to the grand jury. On December 15, 1981, the grand jury returned a superseding indictment that adds an additional perjury count against Kamiyama and makes certain changes in the language of other counts.

The defendants have made a number of substantive and procedural motions, many of which have already been decided.³ Several motions remain outstanding. Moon moves to dismiss the tax counts on the ground that they are legally insufficient and to dismiss all the counts on the grounds of prosecutorial misconduct and abuse of the grand jury process. Kamiyama, in addition to joining in Moon's motions, moves to dismiss the perjury counts on the grounds that his answers before the grand jury were not material, that the questioning of him was unfairly tailored to extract inaccurate answers, and that the interpreter in the grand jury proceedings failed to translate his testimony properly.⁴

I. The Tax Counts

The first area of dispute concerns the tax counts of the indictment. Moon moves to dismiss counts two, three, and four, which charge Moon with knowingly and wilfully filing false income tax returns for the years 1973, 1974, and 1975, a violation of 26 U.S.C. § 7206(1) (1976), and count one insofar as it charges a conspiracy to file false tax returns. (Counts two, three, and four all allege that Moon failed to report interest income from various accounts at the Chase Manhattan Bank. Additionally, count two alleges that Moon failed to report income from the receipt of stock in Tong I1 Enterprises and that Moon gave a false source for the income declared on his 1973 tax return.) According to Moon, two grounds support dismissal: the legal insufficiency of the taxability theory stated in the indictment and the failure of the prosecutor to instruct the grand jury properly on the applicable law. Moon also moves to dismiss the false source allegation of count two on the ground that it is legally insufficient. These claims are without merit.

A. Legal Sufficiency and the Prosecutor's Instructions

Moon's argument that the tax counts of the indictment are legally insufficient has been mooted by the filing of the superseding indictment. The gist of his argument was that the indictment was invalid on its face because, rather than alleging that Moon had beneficial ownership of the bank accounts and the stock, a prerequisite for taxability, it alleged only that Moon had "dominion and control" over the accounts and that the stock was "issued" to Moon. In view of the language in the superseding indictment that Moon "owned" the accounts and the Tong I1 stock, even Moon concedes that "counts one through four are now valid on their face." Reply Memorandum in Support of Pretrial Motions of Rev. Sun Myung Moon at 2 (footnote omitted).⁵

The Government's decision to alter the language of the indictment, however, has not completely curtailed Moon's contention that the prosecutor's legal instructions to the grand jury on the taxability of income must be scrutinized by the Court. For example, Moon wants to know whether the reasons for changing the language in the indictment were explained to the grand jury and whether ownership was defined as something less than beneficial ownership. Although this course of action is rarely taken by federal courts (particularly where, as here, the grand jury transcripts amount to several thousand pages), the peculiar circumstances of this case, especially the filing of the superseding indictment, have prompted this Court to review the prosecutor's instructions to the grand jury that returned the superseding indictment. Having done so, however, this Court cannot grant Moon's motion to dismiss, for there is no indication that the grand jury was misled as to the applicable law.

B. The False Source

Moon's arguments regarding the false source allegation are also unconvincing. On the 1973 joint tax return filed by Moon and his wife,⁶ line 9 asked for "Wages, salaries, tips and other employee compensation." It also required that the taxpayer attach his W-2 forms or, if unavailable, to provide an explanation. Moon entered the amount of $14,458.41 on line 9. To explain the absence of an accompanying W-2 form, he also attached the following note:

Because the Unification Church was incorporated in New York only in March of 1974 the books were not clearly established and matters such as W-2's were not yet organized. This happened because in general no one in the Unification Church receives any compensation whatsoever, wages and salaries, and the corresponding forms (W-2's) have never been needed.

The indictment, as clarified by the Government's response to Moon's bill of particulars, charges that this statement falsely identified the Unification Church as the source of Moon's income. Moon argues that this false source allegation is legally insufficient.

The first argument proffered by Moon is that the statement amounted only to an explanation of the absence of an attached W-2 form, not a representation that the Unification Church was the source of the income reported on line 9.⁷ This is untenable. A W-2 form indicates the amount of income received from a particular source, and it is prepared by the organization or individual that is the source of the income. The only reasonable inference that can be drawn from the statement that no W-2 forms were attached because the administrative apparatus of the Unification Church was not yet established is that the Unification Church was the source of the income.

Moon's second argument is that, even if this statement amounted to a representation of the source of the income, he cannot be prosecuted because neither the Internal Revenue Code nor the Regulations explicitly require a taxpayer to identify the source of income reported on line 9, but not reflected in a W-2 form. In support of this proposition, Moon cites United States v. Levy, 533 F.2d 969 (5th Cir. 1976), in which the Fifth Circuit held that a taxpayer could not be prosecuted under section 7206(1) for making false statements on IRS Form 433-AB because use of the form was not authorized by the Code or the Regulations. Id. at 975.

Reliance on Levy is misplaced, however, because it does not stand for the proposition that one can be prosecuted under section 7206(1) only if the false statement was made in response to a question specifically authorized by the Code or Regulations. This was made clear in United States v. Taylor, 574 F.2d 232 (5th Cir.), cert. denied, 439 U.S. 893, 99 S.Ct. 251, 58 L.Ed.2d 239 (1978), a subsequent Fifth Circuit case ignored by Moon. Taylor involved a prosecution for false reporting on Schedules E and F of Form 1040. Distinguishing Levy, the court rejected the defendant's argument that prosecution was barred because use of the Schedules was not explicitly required by the Regulations. Id. at 237. It noted that

section 7206(1) pertains to willful subscription to "any return, statement, or other document" made under penalty of perjury. Levy involved the question of whether Form 433-AB was a "statement" within the meaning of the statute. We held that "statement" referred only to documents required by the Internal Revenue Code or any lawfully

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