USA v. Stanton Doc 25 Filed 29 )Ct 12

UNITED STATES DISTRICT COURTMIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

UNITED STATES OF AMERICA

v. Case No. 8:12-Cr-343-T-33AEP

JOHN D. STANTON, III

UNITED STATES’ RESPONSE IN OPPOSITION TODEFENDANT’S MOTION TO DISMISS THE INDICTMENT

The United States of America, by Robert E. O'Neill, United States

Attorney for the Middle District of Florida, and the undersigned Assistant United

States Attorney, responds in opposition to the Defendant’s captioned motion as

follows:

I. Statement of Facts

Defendant John Stanton has been charged in an eight-count Indictment

(Doc 1), in Count One, with corruptly obstructing and impeding the due

administration of the internal revenue laws through an ongoing course of conduct

that occurred between July 15, 2004 and November 2008. A non-exhaustive

catalogue of the obstructive means Stanton used to impede and obstruct are

detailed in Count One, to include impeding and stalling the progress of an official

IRS audit; causing a false 2003 corporate return for Florida Engineered

Construction Products Corporation (hereinafter “FECP”) to be filed; causing two

separate fraudulent promissory notes to be prepared and backdated, which

Case 8:12-cr-00343-VMC-AEP Document 25 Filed 10/29/12 Page 1 of 13 PageID 65

fraudulent notes purported to document two loans, each of nearly a quarter

billion dollars; causing checks to be written, which checks Stanton falsely

characterized as interest payments; causing the filing of false Forms 1099-INT;

and willfully failing to file corporate tax returns. (See Doc 1, pp. 2,3)

As to Counts Four and Seven: Count Four alleges a willful failure to file a1

corporate tax return covering tax year 2005. In Count Four it is alleged that the

defendant was the President of FECP corporation; that he was required by law,

for and on behalf of the corporation, on or before September 15, 2006, to make

an income tax return, stating specifically the items of the corporation’s gross

income and the deductions and credits allowed the corporation by law; and that

on or about September 15, 2006 the Defendant willfully failed to do so.

Count Seven alleges a willful failure to file an individual tax return

(Defendant John Stanton’s) covering tax year 2005. Count Seven alleges that

during calendar year 2005 the Defendant was a resident of St. Petersburg,

Florida, and that he personally received gross income in excess of $16,400; by

reason of such gross income he was required by law to make a personal income

tax return stating the items of his gross income and any deductions and credits

to which he was entitled, on or before October 17, 2006; and that he willfully

failed to do so.

In this Response we will group our discussion of the indictment counts in1

the same manner the Defendant has grouped them in the Defendant’s motion, tofacilitate the Court’s review of the parties’ arguments.

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As to Counts Two, Five, and Eight: Count Two alleges that the Defendant

was a director of Denouement Strategies, Inc. (hereinafter “Denouement

Strategies”) and that he was therefore required by law to file an income tax

return for and on behalf of the Denouement Strategies corporation, covering tax

year 2006, on or before March 17, 2007, stating the items of the corporation’s

gross income and the deductions and credits to which the corporation was

allowed by law; and that the Defendant willfully failed to do so.

Count Five alleges that Defendant Stanton, President of FECP, was

required by law, on or before September 15, 2007, to make an income tax return

for and on behalf of the FECP corporation, covering tax year 2006, stating

specifically the items of the corporation’s gross income and the deductions and

credits to which it was allowed by law; and that he willfully failed to do so.

Count Eight alleges a willful failure to file an individual tax return

Defendant Stanton’s) covering tax year 2007. Count Eight alleges that during

the calendar year 2007 the Defendant was a resident of St. Petersburg, Florida,

and that he personally received gross income in excess of $17,500; by reason of

such gross income he was required by law to make a personal income tax return

stating the items of his gross income and any deductions and credits to which he

was entitled, on or before October 17, 2008; and that he willfully failed to do so.

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As to Counts Three and Six: Count Three alleges that the Defendant was

a director of Denouement Strategies and that he was required by law to file an

income tax return for and on behalf of the Denouement Strategies corporation,

covering tax year 2007, on or before March 17, 2008, stating the items of the

corporation’s gross income and the deductions and credits to which the

corporation was allowed by law; and that the Defendant willfully failed to do so.

Count Six alleges that Defendant Stanton, President of FECP, was

required by law, on or before September 17, 2008, to make an income tax return

for and on behalf of the FECP corporation, covering tax year 2007, stating

specifically the items of the corporation’s gross income and the deductions and

credits to which it was allowed by law; and that he willfully failed to do so.

II. Argument Regarding Multiplicity

“An indictment is multiplicitous if it charges a single offense in more than

one count.” United States v. Williams, 527 F.3d 1235, 1241 (11 Cir. 2008)th

(citation omitted). See also United States v. Howard, 918 F.2d 1529, 1532 (11th

Cir. 1990), cert. denied, 500 US 943 (1991). According to Williams, “[a]

multiplicitous indictment not only subjects the defendant to numerous sentences

for one offense, but also prejudices the defendant and confuses the jury by

suggesting that not one but several crimes have been committed.” Williams, 527

F.3d at 1241 (citation and internal quotation marks omitted). Such an indictment

violates double jeopardy principles by affording a jury multiple opportunities to

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convict a defendant; accordingly, the test adopted by the Supreme Court in

Blockburger v. United States, 284 U.S. 299, 52 S. Ct. 180, 76 L.Ed.306 (1932)

must be used “to determine whether an indictment is multiplicitous, verifying that

each count requires an element of proof that the other counts do not require.”

Williams, 527 F.3d at 1241 (citation omitted; emphasis added). Each of the

counts in the pending indictment, and each group of counts cited in the

Defendant’s motion, pass this test. Each of the Defendant’s claims is addressed

below.

Counts Four and Seven Are Not Multiplicitous: Count Four alleges that

the Defendant, as President of FECP, willfully failed to file a corporate income

tax return for that entity, for the 2005 tax year. Count Seven alleges that the

Defendant willfully failed to file an individual income tax return for the 2005 tax

year. These two counts charge two distinct offenses committed on two different

dates and each of these offenses requires proof of a fact the other does not

require.

Count Four requires proving that the Defendant was a corporate officer of

FECP and had an obligation to make a corporate income tax return for tax year

2005. The corporate tax return required to be filed in connection with Count Four

is an IRS Form 1120 return. Count Four does not require proof of an obligation

to file a Form 1040 return (the return that is required in Count Seven). Count

Four further requires proof that, knowing the legal duty, the Defendant failed to

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file a corporate return on behalf of FECP. Count Seven does not require proof

that the Defendant was aware of any obligation whatsoever with respect to the

filing of a corporate tax return, and neither does Count Seven require proof of

that fact the Defendant failed to file a corporate tax return.

Count Seven requires proof of different facts. Count Seven requires proof

that Defendant Stanton, in his individual capacity, earned income in excess of

the minimum threshold and that he willfully failed to file an individual income tax

return for tax year 2005. Count Seven does not require proof of an obligation to

file a Form 1120 return. Count Seven requires proof of an individual obligation to

file a Form 1040 return. Count Four does not require proof of any minimum

income threshold as a triggering event to require the filing of a corporate income

tax return, as does Count Seven.

Counts Four and Seven address separate legal duties–Count Four

addresses the corporate duty to file a corporate tax return regardless of income

threshold and Count Seven addresses the individual duty to file an individual

income tax return when gross income exceeds a threshold amount. Counts Four

and Seven, moreover, require proof of a willful failure to file within different

statutory filing deadlines–March 15 for corporations versus April 15 for

individuals.

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Counts Two, Five, and Eight are Not Multiplicitous: Consistent with the

foregoing reasoning, each of these counts charges a violation of a separate legal

obligation and these offenses each require proof of a fact not required by the

other counts. Count Two alleges the Defendant willfully failed to file a corporate

tax return on behalf of Denouement Strategies for the 2006 tax year. This

offense requires proof of Denouement Strategies’ obligation to file a corporate

income tax return; Defendant Stanton’s responsibility to file Denouement

Strategies’ corporate return; and Stanton’s willful failure to file that corporate

return. Count Two does not require any proof whatsoever with respect to

Stanton’s individual obligation to file his personal tax return or his willful failure to

file his personal income tax return. Neither does Count Two require proof of the

Defendant’s responsibility to file or his willful failure to file a corporate return for

and on behalf of FECP.

Count Five alleges that the defendant willfully failed to file a corporate

income tax return on behalf of a separate corporate entity, FECP, for the 2006

tax year. This offense requires proof of FECP’s obligation to file a corporate

income tax return; Defendant Stanton’s responsibility, as President, to file

FECP’s corporate return; and Stanton’s willful failure to file FECP’s corporate

return. Count Five does not require any proof whatsoever with respect to

Stanton’s individual obligation to file his personal tax return or his willful failure to

file his personal income tax return. Neither does Count Five require proof of the

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Defendant’s responsibility to file or his willful failure to file a corporate return for

and on behalf of Denouement Strategies.

Count Eight alleges Stanton’s willful failure to file his individual income tax

return for an entirely different tax year, viz. 2007. Count Eight requires proof that

Stanton personally received gross income in excess of $17,500; that he was

required to file on or before October 17, 2008; and that he willfully failed to file a

personal income tax return on or before that date. Counts Two and Five do not

require proof of those facts. And, Count Eight requires no proof whatsoever with

respect to any corporation’s obligation to file any tax return, as do Counts Two

and Five.

Denouement Strategies, FECP, and Defendant John Stanton each has a

legal duty to file an income tax return. Each duty is separate and distinct from

the other’s duty and the crimes charged in the indictment each require proof of

the corresponding separate legal duty and each requires its individual proof of a

willful failure to comply with those distinct and different duties.

Counts Three and Six Are Not Multiplicitous: Again, these offenses each

require proof of a fact not required by the other count. Count Three alleges that

Defendant Stanton willfully failed to file a corporate tax return for and on behalf

of Denouement Strategies for the 2007 tax year. That offense requires no proof

whatsoever with respect to Defendant Stanton’s individual obligation to file his

own tax return or any proof with respect to either Stanton’s obligation to file or his

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willful fail to file a corporate return for and on behalf of FECP. Count Six alleges

that the Defendant willfully failed to file a corporate income tax return for and on

behalf of the separate corporate entity, FECP, for the 2007 tax year. This

offense requires proof of FECP’s obligation to file an income tax return;

Defendant Stanton’s responsibility, as President, to file FECP’s corporate return;

and Stanton’s willful failure to file FECP’s corporate return for that tax year.

Count Six does not require any proof whatsoever with respect to Stanton’s

individual obligation to file his personal tax return or with respect to his willful

failure to file his personal income tax return. Neither does Count Six require

proof of the Defendant’s responsibility to file or his willful failure to file a

corporate return for and on behalf of Denouement Strategies.

III. Argument Regarding Double Jeopardy

Counts Two through Eight Do Not Violate Double Jeopardy: For the

reasons outlined above, each of Counts Two through Eight allege separate,

distinct violations of 26 U.S.C. § 7203. The offenses require proof of criminal

conduct committed on different dates and each requires proof of a different fact.

They do not expose the defendant to double jeopardy.

Count One: Here, the Defendant argues that he is exposed to double

jeopardy (multiple convictions and punishment for the same acts) because the

jury in our case would be permitted to make a finding of guilt with respect to

Counts Three through Six and transfer those same acts to Count One. (Doc 18,

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pp. 5, 6) The argument is without merit, for the following reasons. Federal

criminal prosecutions frequently involve indictments charging multiple offenses

where the evidence proving the separate violations overlaps substantially. Under

Blockburger v. United States, 284 U.S. 299, 304 (1932), if the same transaction

violates two distinct statutes, the test in determining whether there are multiple

offenses is whether each statutory provision requires proof of a fact that the

other does not require. This test can be satisfied even when there is substantial

overlap in the evidentiary proof for the two separate offenses. United States v.

Felix, 503 U.S. 378, 386 (1992) (“[A] mere overlap in proof between two

prosecutions does not establish a double jeopardy violation.”) A common

example of this principle involves a frequent occurrence--separate charges and

convictions for conspiracy and the underlying substantive offense, where

commission of the substantive offense may actually be the centerpiece of the

government’s charged conspiracy violation. Conviction of both a conspiracy and

the underlying substantive offense do not violate double jeopardy. A substantive

crime and the conspiracy to commit that crime are not the same offense for

double jeopardy purposes because the conspiracy to commit that crime requires

proof of an element that the substantive offense does not require, viz. the

agreement between two persons to commit the underlying offense. See United

States v. Felix, Id. at 503 US 388-89 (1992).

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The elements of the crime charged in Count One, corrupt interference

with Internal Revenue laws in violation of 26 U.S.C. § 7212(a), are proof that (1)

the defendant knowingly tried to obstruct or impede the due administration of the

Internal Revenue laws; and (2) the defendant did so corruptly. Eleventh Circuit

Patten Jury Instructions, Criminal, Offense No. 111 (2010).

The elements required to prove Counts Two through Eight, the willful

failure to file tax returns in violation of 26 U.S.C. § 7203, are proof that (1) the

defendant was required by law or regulation to file an income tax return for the

taxable year alleged in the indictment, (2) that the defendant failed to file a return

when required by law, and (3) that at the time the defendant failed to file the

return, he knew he was required by law to file a return. Eleventh Circuit Pattern

Jury Instructions, Criminal, Offense No. 108 (2010).

These two criminal violations each contain an element not contained in

the other offense; indeed, there are no common elements between the two

offenses. The two offenses even require a different mens rea –Count One

requires proof that the Defendant acted corruptly and Counts Two through Eight

require proof that Defendant Stanton acted willfully. Count One includes among2

Proof of willfulness requires proof that Stanton intentionally violated a2

known legal duty (Cheek v. United States, 498 U.S. 192-200-201 (1991)),whereas proof of corrupt intent requires proof that the Defendant acted with theintent to secure an unlawful advantage (United States v. Popkin, 943 F.2d 1535,1540 (11 Cir. 1991) (“corruptly . . . prohibits all activities that seek to thwart theth

efforts of government officers and employees in executing the laws enacted byCongress.”)

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its many factual allegations of corrupt conduct that Defendant Stanton obstructed

and impeded an IRS audit by failing to file corporate tax returns. That does not

change the analysis. 26 U.S.C. § 7212(a) prohibits a broad range of conduct,

and conduct that also falls within a narrower statutory proscription–here, 26

U.S.C. § 7203–may properly comprise a part of the conduct constituting the

broader statutory violation without violating double jeopardy. Blockburger v.

United States, 284 U.S. 299 at 304 (1932); United States v. Honarvar, 477 F.3d

999, 1001-02 (8 Cir. 2007); United States v. Chacko, 169 F.3d 140, 146-47 (2dth

Cir. 1999). See also United States v. Armstrong, 974 F.Supp.528, 541 (E.D. Va.

1977).

IV. Conclusion

WHEREFORE, for the reasons set forth above, the United States

respectfully requests that Defendant Stanton’s motion be denied.

Respectfully submitted,

ROBERT E. O'NEILLUnited States Attorney

By: s/Robert T. Monk ROBERT T. MONKAssistant United States AttorneyUnited States Attorney No. 026400 North Tampa Street, Suite 3200Tampa, Florida 33602Telephone: (813) 274-6000Facsimile: (813) 274-6103E-mail: [email protected]

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mailto:[email protected]

U.S. v. JOHN D. STANTON, III Case No. 8:12-Cr-343-T-33AEP

CERTIFICATE OF SERVICE

I hereby certify that on October 29, 2012, I electronically filed the

foregoing with the Clerk of the Court by using the CM/ECF system which will

send a notice of electronic filing to the following:

Paul DeCailly, [email protected]

By: s/Robert T. Monk ROBERT T. MONKAssistant United States AttorneyUnited States Attorney No. 026400 North Tampa Street, Suite 3200Tampa, Florida 33602Telephone: (813) 274-6000Facsimile: (813) 274-6103E-mail: [email protected]

-13-L:\_Criminal Cases\S\stanton, john_2009R03065_rtm\p_response to defendant's motion to dismiss indictment.wpd


mailto:[email protected]

Documents

USA v. Stanton Doc 25 Filed 29 )Ct 12