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As we approach the end of the year, many of us are preparing to file our 2015 tax returns.  As we do so, it is important to remember that errors and omissions relating to compliance with the tax laws can result in criminal charges.  What follows is a very brief primer on how the Internal Revenue Service investigates tax crimes, as well as the results of some relatively recent criminal investigations.

The Criminal Investigation (“CI”) section of the Internal Revenue Service investigates possible criminal violations of the tax laws.  CI has approximately 3,500 employees worldwide.  Approximately 2,500 of these employees are special agents whose investigative jurisdiction includes tax, money laundering and Bank Secrecy Act violations that rise to the level of criminal conduct under the Internal Revenue Code.  These investigations are very record-intensive.  Because financial records are becoming increasing automated, CI agents are trained to recover evidence stored in electronic format, regardless of whether it is password protected, encrypted or electronically shielded by some other means.

CI has three investigative programs.  The first is Legal Source Tax Crimes.  These investigations involve legal industries and occupations, and legally earned income.  Violations in this area include income tax evasion, failure to file a tax return, or filing a false tax return.  Specific crimes in this area frequently include employment tax fraud and false claims for tax refunds.  Individuals who refuse to file tax returns and/or pay taxes as a challenge to the constitutionality of the tax system are also typically investigated through this program.  The second CI program is Illegal Source Financial Crimes.  This program focuses on monies coming from illegal sources such as embezzlement, kickbacks, or health care fraud.  Specific crimes in this area can include Medicare over billing, kickbacks to public officials, securities fraud, ponzi schemes and illegal gambling activities.  The final investigative program is Narcotics-Related and Counterterrorism Financing Crimes.  This program focuses on the financial profits of drug trafficking and money laundering operations, with an eye toward cutting off funding for such activities.  All three programs are interdependent and, where necessary, coordinate with other federal law enforcement agencies. Continue reading ›

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Maryland v. Kulbicki, No. 14-848 (2015), a recent US Supreme Court decision, helps to further define the concept of ineffective assistance of counsel for purposes of Sixth Amendment claims.  The case is important for anyone considering a motion for post-conviction relief in State court or a habeas petition in Federal court based upon an argument that their attorney did not perform properly.

In 1993, Kulbicki shot his paramour in the head at close range.  His trial commenced in Maryland state court in 1995.  The prosecutor called an FBI agent as an expert witness to testify on the subject of Comparative Bullet Lead Analysis (“CBLA”).  At the time of trial, CBLA was accepted by the relevant scientific community as valid.  The expert testified that the composition of elements in the molten lead of a bullet fragment located in Kulbicki’s truck matched the composition of lead in a bullet fragment removed from the victim’s brain, and that one would expect to find such a similarity when examining two pieces of the same bullet.  The expert also testified that a bullet taken from Kulbicki’s gun did not exactly match the two fragments, but was sufficiently similar to conclude that the two bullets probably came from the same package.  In light of this and other evidence, Kulbicki’s jury convicted him of first-degree murder.

Kulbicki subsequently filed a petition for post-conviction relief, which he amended in 2006 to include a claim that defense counsel was ineffective for failing to question the legitimacy of CBLA.  Between the time of the conviction and 2006, CBLA had fallen out of favor, was no longer generally accepted by the scientific community, and was therefore inadmissible.

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The United States Attorney’s Offices for the Southern District of New York and the Northern District of Georgia recently announced three indictments charging several defendants with, among other things, computer hacking, theft and fraud.  [US v. Shalon, No. 15-cr-00333 (S.D.N.Y.); US v. Murgio, No. 15-cr-00769 (S.D.N.Y.); and US v. Shalon, No. 15-cr-00393 (N.D.Ga.)]  More specifically, the grand juries hearing these cases charged the defendants with computer hacking, securities and wire fraud, identity theft, illegal internet gambling, conspiracy to commit money laundering, and operating an unlicensed money transmitter.  These cases are noteworthy not only because of the sheer magnitude of the enterprise described by federal prosecutors, but also because of the manner in which they highlight the increasingly aggressive posture that the Justice Department continues to take toward cybercrime.

According to the US Attorney, the defendants hacked into the computer systems of several large financial services companies and financial news publishers.  Federal prosecutors did not identify the companies involved, but other news sources identified at least some of them as JPMorgan Chase, ETrade, Scottrade, TDAmeritrade, Fidelity Investments, and Dow Jones.  The defendants allegedly stole personal information for more than 100 million people and used it to, among other things, market securities in a deceptive manner by arranging to have prospective purchasers cold-called.

The defendants’ other activities allegedly included operating illegal online casinos, payment processing for criminals, operating an illegal bitcoin exchange, and laundering money through up to 75 shell companies and accounts around the world.  In the course of doing so, the defendants purportedly procured and used over 200 false identification documents which included over 30 false passports issued by almost 20 different countries, as well as servers located in Egypt, the Czech Republic, South Africa, Brazil and other countries.  The US Attorney believes the defendants generated hundreds of millions of dollars in illegal proceeds.  Many of the charged offenses carry federal prison terms of 20 years. Continue reading ›

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On December 2, 2015, the New Jersey Supreme Court decided State v. Watts.  This decision, coming on the heels of the late-September decision of State v. Witt, may suggest a continuing erosion of a criminal defendant’s constitutional right to be free from unreasonable searches and seizures.

The police obtained a warrant to search the defendant and his apartment, set up a surveillance, and waited for the defendant to leave his residence.  The defendant left his home and walked to a liquor store located about 1 1/2 blocks from his apartment.  He was detained when he left the liquor store and patted down for weapons.  The officers also took his apartment keys, but decided to not conduct a more thorough search of the defendant’s person at that point because they were then located in a busy area with pedestrian and vehicular traffic.  Some of the officers then returned to the defendant’s apartment with his keys.  They entered and searched it, but did not locate drugs or related paraphernalia.  Other officers handcuffed the defendant, placed him in a police car, and transported him back to his apartment.  He shook his leg as he walked, and four bundles of heroin fell from his pants.

The defendant moved to suppress the drugs, arguing that the police could not detain him to conduct another search after the pat down on the street.  The trial court granted the motion and suppressed the drugs, finding that the officers could not continue to detain the defendant and conduct further searches after the search of his person conducted outside the liquor store failed to yield any drugs.  The court believed that the warrant gave the police one opportunity to search the defendant – either outside the liquor store or back at his apartment – and additional searches violated his constitutional rights.  Continue reading ›

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Generally speaking, a motor vehicle is not protected from unreasonable searches and seizures to the same extent as a home.  Our State’s Supreme Court has further reduced that level of protection.

William Witt was pulled over on Route 48 in Carneys Point in Salem County in December 2012.  Witt’s high beams were activated, and he failed to dim them as he passed a nearby police officer.  The officer spoke with Witt, determined that he was intoxicated, performed field sobriety tests, and arrested him.  The officer searched the car for an open alcohol container and located a handgun in the center console.  Witt moved to suppress the gun, arguing that the search and seizure were unreasonable.  This argument was based on the 2009 Supreme Court decision, State v. Pena-Flores, which required the police to have both probable cause and exigent circumstances before conducting a warrantless search of an automobile.  The search of Witt’s vehicle was unconstitutional because there were no exigent circumstances preventing the police from first obtaining a warrant.

In the September 2015 decision of State v. Witt, the NJ Supreme Court overturned Pena-Flores and retreated to the standard set in the 1981 decision of State v. Alston.  The earlier standard allowed police to search a vehicle without a warrant when they had probable cause to believe the vehicle contained evidence of a crime, and where the probable cause stemmed from circumstances that were unforeseeable and spontaneous. Continue reading ›

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One of the first decisions made in any criminal case involves setting bail.  In New Jersey state courts, the initial bail is frequently set by a municipal court judge.  This judge will decide if the defendant will be required to post bail or be released on their own recognizance.  If bail is required, the judge will set the required dollar, as well as related terms and conditions.   These will include, among other things, whether the defendant will be required to post the entire amount of the bail, be permitted to use a bondsman, or be allowed to post 10% of the face amount of the bail with the Court which will enable the defendant to avoid paying a fee to the bondsman and possibly allow for the recovery of the amount posted when the matter is concluded.  In some cases, the judge may determine that the defendant must post the entire bail on their own.  Generally speaking, municipal judges tend to set high bails.  If the defendant cannot afford the bail as set by the municipal judge, s/he must remain incarcerated until an attorney can file a motion to review the bail and have it heard by a Superior Court judge who will determine if it is appropriate under the circumstances.

For over two years, Jonathan Lippman, New York State’s Chief Judge, has been advocating for changes to New York’s bail statute, which was enacted in 1970.  Some of his suggestions, driven by his concern that many people remain incarcerated while their case is pending simply because they cannot afford the bail set in their case and are therefore penalized for being poor, are noteworthy and merit consideration by New Jersey and other jurisdictions.

New York’s situation is probably similar to that in other states.  Approximately 50,000 people jailed each year in New York City cannot afford the initial bail set in their case.  More than half of these defendants remain incarcerated while their case is pending.  Four out of 10 Rikers Island defendants are in jail because they cannot afford their bail. Continue reading ›

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The United States houses a quarter of the world’s prison population.  The Justice Department has an annual budget of about $27 Billion, a third of which is spent on operating the federal Bureau of Prison’s 120 facilities.  Further, since 1980, the US population has grown by about a third, while the federal prison population has grown by about 800%.  It is estimated that federal prisons are currently operating at about 40% over capacity.  Much of this resulted from the harsh sentences imposed for drug-related crimes in the 1980s and 1990s, when the approach to this class of offenders was mass-incarceration.

In April, 2014, the United States Sentencing Commission, the body responsible for formulating sentences for federal offenses, generated new guidelines that reduced the penalties for non-violent drug crimes.  It later said that the revised guidelines could be applied retroactively to many inmates serving long sentences for narcotics-related offenses, leading to inmate requests for reduced sentences.

The Commission’s actions on this issue coincide with bipartisan efforts to reverse the mass-incarceration approach to drug crimes.  Indeed, a bipartisan group of senators recently proposed substantial revisions to federal sentences geared toward reducing mandatory minimum sentences and granting early release to inmates serving sentences disproportionate to their offenses. Continue reading ›

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A federal statute (18 U.S.C. Sec. 875(c)) makes it a crime to transmit in interstate commerce communications containing threats to injure someone.  Anthony Elonis, who was an active Facebook user, placed posts on his Facebook page that purportedly threatened patrons and employees of the park where he worked, his ex-wife, police officers, and school-age children.  His online activities were eventually brought to the attention of the FBI.  An agent created a Facebook account to just to monitor Elonis’ online activities.  The agent later visited his home, after which Elonis posted material on his page threatening her.  A grand jury charged Elonis with five counts of violating the above-referenced statute.  He went to trial and lost, was sentenced to a custodial term of almost four years with three years of supervised release, and the Third Circuit Court of Appeals affirmed.

At this point, some legal background is unfortunately necessary.  Every crime consists broadly of two parts – a physical act or acts and a particular mental state.  The act or acts have to be accomplished with the required mental state in order to constitute a crime.  Some criminal statutes will say specifically which mental state is required in order to make out that particular offense (e.g., purposely, knowingly, recklessly, intentionally).  But not every criminal statute defines the required mental state.  The statute that Elonis violated did not include a particular mental state, and the question before the Court was which mental state was required to support the conviction and whether or not Elonis’ jury was properly instructed on this issue.  The Court ultimately found that the jury instruction was defective, reversed the Third Circuit’s decision, and remanded the case for further proceedings.

The Court’s decision contains a terrific analysis of the interplay between mental states and potentially criminal conduct, and how to ascribe a particular mental state to a set of potentially criminal acts when the statute in question is silent on this issue.  All of that will certainly be of great interest to lawyers and judges but, given the prominent role social networking sites play in our daily lives, what does this case mean for the average user of these electronic media? Continue reading ›

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Cleveland, Ohio has become the latest city to enter into a consent decree with the United States Justice Department (“DOJ”) concerning the conduct of its police force.  Other cities that have previously entered into similar agreements include New Orleans, Seattle and Detroit.

The consent decree stemmed from a DOJ investigation that found Cleveland police officers had routinely used excessive force (e.g., tasers, pepper spray and guns) against mentally ill, unarmed and already-handcuffed suspects.  DOJ investigators reviewed approximately 600 use-of-force incidents that occurred between 2010 and 2013 and concluded that officers almost routinely used guns in a “careless and dangerous manner”.  Other problems with the police department included its apparent inability and/or unwillingness to investigate complaints against itself.

The consent decree will cover such topics as use of force by police officers, community policing and engagement, accountability, crisis intervention and bias-free policing.  The consent decree will be supervised by a Federal judge, and will terminate only after Cleveland can demonstrate sustained and substantial compliance with its terms.  If the City fails to implement the changes contemplated by the agreement, the judge can order them to do so. Continue reading ›

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The Cook County Jail in Chicago is one of the largest county jails in the United States, holding up to 9,000 inmates on any given day.  It is estimated that approximately one third of these inmates are mentally ill.  Indeed, Cook County officials have stated that the jail is, in effect, the largest mental health facility in Illinois.

Unfortunately, and as I have written in other posts, it is not unusual for a jail or prison facility to hold such a large number of mentally ill inmates.  What is unusual at Cook County, however, is the fact that the new director of the jail is a Clinical Psychologist, Dr. Nneka Jones Tapia.  Dr. Jones Tapia is apparently no stranger to the issues of mentally ill jail inmates or the situation in Cook County, having previously been in charge of the jail’s four divisions that house its large population of inmates with mental health issues.

Statistics show that the overall inmate population at the jail may be falling; however, the number of inmates with mental health issues either remains constant or increases.  These inmates suffer from the entire array of mental health problems including, without limitation, depression and bipolar disorder.  Some of them are floridly psychotic and require stabilization. Continue reading ›

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