Attorney-at-Law

FRAUD AND WAR CRIMES?

In Uncategorized on 09/29/2014 at 21:00

No, not more protester stuff, but Judge Laro has a serious question to deal with in Charles L. Garavaglia, Docket No. 2500-07, filed 9/29/14.

It looks cut-and-dried at first. Chas got nailed for a deficiency back in 2011, and Sixth Circuit affirmed the nailing. But now Chas wants to move out of time to vacate the affirmed decision, claiming IRS defrauded him and Tax Court.

Chas claims IRS grabbed documents by the truckload from him and his partner George Rogers. Chas and George took a plea in their criminal cases, and George lost a civil case.

IRS asked George if he wanted his partnership papers back, and he said no, destroy them.

IRS claims they did, or that they didn’t exist, when Chas tried the deficiency case against him. Chas said he needed the papers to prove that what IRS claimed was income was really loans.

IRS said there was no reason to suppose that any documents existed that would exonerate Chas. Moreover, said IRS “but what he dreams is missing never existed in the first place. What are the specific missing documents? Cancelled checks and bankrecords showing his fictitious loans to Trans and Branch? Those never existed. You cannot go missing if you never existed. There is no missing evidence that would have helped Garavaglia.” Order, at p. 7.

So Chas lost at Tax Court, and Sixth Circuit affirmed.

Lo and behold, as a now-deceased colleague used to say, two-and-a-half years later, there turns up in the IRS CID evidence room several, disorganized boxes of documents with Chas’s name on them. Probably next to the Rose Law Firm billing records. But remember, this is a non-political blog.

IRS tells Chas, and Chas tells “foul”. He gets 5 boxes, but IRS says there are 30, and of the 17,384 documents IRS gives Chas, some are canceled checks.

Chas wants to vacate the earlier decision, claiming IRS defrauded the Court.

Now, as my younger daughter remarked when the Bible reading began with Genesis 1:1, “Settle down, we have a long way to go”.

Question one: has Tax Court authority to vacate the earlier decision, even if fraud could be proven?

Tax Court is an Article I court. That means it doesn’t have the full weaponry of the rest of the Federal judicial system (Article III). Tax Court has what Congress gave it. And that ain’t much, as readers of my blog have long since discovered.

Of course, any Court which hasn‘t authority to set aside its decisions when it has been defrauded is a place where fraud can flourish. After all, if a runner knows the pitcher and catcher can’t try a pickoff, why not steal a base? Or maybe two? And if the ref can’t send a player to the sin-bin, why not hook, trip or slash?

But Judge Laro plows through various Sixth Circuit cases and finds Tax Court has authority to vacate its orders, opinions and decisions when it has been defrauded, at least in the Sixth Circuit.

Question two: Why should a line on a map determine whether a court can set aside a decision, order, judgment or opinion when, in G. M. Fraser’s words, justice  “was not only blind, but had a bag over her head”? Or in Paul Simon’s words, why should a party, be it government or taxpayer, be able to defraud the Court when they’re “one step ahead of the shoe shine. Two steps away from the county line.” ?

I leave that question to Congress.

Question three: OK, so what’s the test for fraud?

Judge Laro turns to the case of John Demjanjuk. Demjanjuk was accused of being a Nazi death camp guard, stripped of his US citizenship and sent to Israel for a war crimes trial. Though convicted, his conviction was overturned on appeal. Sent to Germany, he was tried there, convicted again, but died before he could appeal, so the conviction was reversed.

The US prosecutors got nailed for defrauding the US court.

Here’s the test Sixth Circuit used: The fraud must be “1. On the part of an officer of the court; 2. That is directed to the ‘judicial machinery’ itself; 3. That is intentionally false, wilfully blind to the truth, or in reckless disregard for the truth; 4. That is a positive averment or is concealment when one is under a duty to disclose; 5. That deceives the court.” Order, at p. 12.

And the party seeking to vacate must prove all five elements by clear and convincing proof.

Now in this case Chas is alleging fraud, and the court is reviewing his pleadings, so his pleadings get the benefit of the doubt. He hasn’t got to prove any of this yet, but if he gets past the paper barrier, he gets his shot at proving what he alleges.

And Chas clears the barriers.

IRS counsel are officers of the court. Chas’s attorneys asked for the documents in discovery and were told they didn’t exist. Because Chas couldn’t present a defense, that subverts the judicial process, because the court can’t fairly decide. Likewise IRS’s attorneys acted with reckless disregard, as they never searched the evidence room, where thirty (count ‘em, thirty) boxes of documents reposed. They certainly had a duty to disclose, as Tax Court rules require disclosure. And the court was certainly deceived, if the judge believed there were no documents, when in fact there were.

OK, so Chas pled a case. Now what?

So far, only paper. Now it’s time to put witnesses on the stand, put papers and things in evidence, and subject all the witnesses to what Dean John Henry Wigmore called ““the greatest legal engine ever invented for the discovery of truth”–cross-examination.

Incidentally, Dean John Henry Wigmore was the greatest authority on the law of evidence in my young day. But his name is definitely his fame. I sometimes think if I had been named Lewis C Wigmore, I’d be on the Supreme Court handing down oracular pronouncements at least worthy of Olympus, if not Sinai, rather than grinding out blogposts as Taishoff the Obscure.

So Judge Laro wants the parties to prepare memoranda, with witness lists and gists, and show up for a hearing.

Should be a blast.

 

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