Judge Laro should really designate some of his comprehensive orders, rather than waiting for me to sift through six pages of nothing-in-particular (barring Judge Goeke following Judge James S. (“Big Jim”) Halpern and giving another boot to James (“Little Jim”) Haber in a replay of my blogpost “Immunology”, 3/18/14; see Vance Finance and Holding Corporation and Subsidiaries, Docket No. 7245-08, filed 4/22/14).
Judge Laro has another couple of Fifth Amendment immunologists on his hands in Jeffrey J. Manquen & Camille A. Manquen, Docket No. 26666-12, filed 4/22/14.
IRS wants Jeff and Cam to tell them their educational and employment histories, and who set up a couple of LLCs, wherewith Jeff and Cam dealt with their IRAs (either trads or Roths), and provided tax and valuation advice in connection therewith. Sound like the old Notice 2004-8, 2004-1 C.B. 333, Abusive Roth IRA Transactions deals?
Howbeit, Jeff and Cam claim that to tell would set them up for a criminal tax case.
Judge Laro agrees to this extent: “Respondent argues that the possibility of criminal prosecution is too remote because he ‘neither has an open criminal case against petitioners nor contemplated a criminal tax prosecution against petitioners.’ A criminal case need not be pending to justify a claim of the Fifth Amendment privilege. Because a witness who fails to assert the privilege in a non-criminal case also forfeits the privilege in a subsequent criminal case, ‘it is necessary to allow assertion of the privilege prior to the commencement of a ‘criminal case’ to safeguard the core Fifth Amendment trial right.’ Chavez v. Martinez, 538 U.S. 760, 771 (2003). Moreover, it is likewise insufficient that respondent does not currently contemplate prosecuting a criminal tax case against petitioners. As long as there is a reasonable possibility of criminal prosecution, which petitioners have demonstrated, we must sustain petitioners’ Fifth Amendment claim.” Order, at p. 4.
However, that sustentation is good only as to Jeff’s and Cam’s assistants. Judge Laro doesn’t see how Jeff and Cam telling their work and school histories sets them up for anything. And he’s the Judge.
“It is the providence of the Court, not the witness, to determine whether a claim of the Fifth Amendment privilege is justified. Rechtzigel v. Commissioner, 79 T.C. 132, 137 (1982). ‘The trial judge in appraising the [Fifth Amendment] claim “must be governed as much by his personal perception of the peculiarities of the case as by the facts actually in evidence.”’ Hoffman v. United States, 341 U.S. 479, 487 (1951) (quoting Ex parte Irvine, 74 F. 954, 960 (C.C.S.D. Ohio 1896)). Order, at p. 3.
“Providence”, not province? Does anybody proofread these opinions?
But forcing Jeff and Cam to disclose their helpers, enablers, guides, philosophers and friends “could: (1) support a conviction that they conspired with their advisors to commit criminal tax fraud; or (2) lead to the discovery of evidence from their advisors that they committed tax fraud.” Order, at p. 4. So IRS, no go on that one.
That was the good news for Jeff and Cam. Now the bad news.
“Invoking the Fifth Amendment privilege is not, however, without consequence in a civil proceeding. The Supreme Court “has recognized ‘the prevailing rule that the Fifth Amendment does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them’. Mitchell v. United States, 526 U.S. 314, 328 (1999) (quoting Baxter v. Palmigiano, 425 U.S. 308, 318 (1976)); see also Sanders v. Commissioner, T.C. Memo. 1997-452. Moreover, we have held that where a party invokes the Fifth Amendment privilege in response to a request for interrogatories, we may place restrictions on the invoking party’s ability to introduce evidence with respect to matters over which he has asserted the privilege to assure fairness to the other party. See e.g. Traficant v. Commissioner, 89 T.C. 501, 502-504 (1987). Finally, the Fifth Amendment privilege may also be waived. Where a party voluntarily testifies in a case, ‘the Fifth Amendment does not allow him to refuse to answer related questions on cross-examination.’ Kansas v. Cheever, 134 S. Ct. 596, 601 (2013). This rule ensures that a party may not ‘set forth * * * all the facts which tend in his favor without laying himself open to a cross-examination upon those facts.’ Id. (quoting Fitzpatrick v. United States, 178 U.S. 304, 315 (1900)).” Order, at p. 3.
So Jeff and Cam, spill about your education and employment, but as for your coadjutors, your lips are sealed. Unless you want to testify on the trial, that is.