Attorney-at-Law

GRAND JURY TESTIMONY

In Uncategorized on 09/13/2022 at 16:06

We’ve been hearing a lot about grand jury subpoenas and testimony lately, so in case some of the testimony may spill over into the realm of taxes, I’ll extract from Judge James S (“Big Jim”) Halpern’s discussion of what happens when the grand jury meets Tax Court, in Alan Brian Fabian, T. C. Memo. 2022-94, filed 9/13/22.

Al’s grand jury tour begins with his phony sale-and-leaseback operation and its unraveling in Bankruptcy Court. While Al’s C Corp was in Bankruptcy Court, the FBI got involved and called in IRS. IRS Special Agent F (name omitted) investigated, and suggested nailing Alan for money laundering and a Section 7206(1) filing false returns for a couple years (hi, Judge Holmes).

Alan cops to mail fraud and filing false returns in USDCDMD. Alan’s plea bargain, to which IRS is explicitly not a party, says IRS can pursue whatever remedies it may have. IRS does, and SA F’s pictures, descriptions, and accounts are front-and-center. Alan asserts that this is grand jury testimony, and cannot be revealed.

“…the district court issued its order granting the United States’ motion to disclose grand jury material to the IRS. The court made its order pursuant to Rule 6(e)(3)(E)(i) of the Federal Rules of Criminal Procedure (District Court’s Rule 6(e) order), finding that there was a particularized need to grant limited disclosure of grand jury material in connection with another judicial proceeding, viz, this case,  i.e., Fabian v. Commissioner, dkt. No. 25589-14. In pertinent part, the district court ordered that grand jury material in petitioner’s criminal case ‘shall be disclosed’ to the Tax Court, limited, however, to the disclosure of ‘information and records related to the resolution of the alleged tax deficiencies and penalties for the tax years 2002, 2003, and 2004.’” T. C. Memo. 2022-94, at pp. 17-18.

Alan’s argument that SA F wasn’t expressly authorized to disclose is a nonstarter.

“The consequence of the District Court’s Rule 6(e) order was to authorize a disclosure of a grand jury matter. The order did not specify a particular actor authorized to make the disclosure but simply ordered that the referenced grand jury material in petitioner’s case ‘shall be disclosed.’ Implicit in that order is that someone otherwise prohibited from disclosing the material may, with impunity,  disclose it to one of the permitted recipients, i.e., to the Tax Court. SA F may well have been a member of the class of persons otherwise prohibited from disclosing the material, but the order freed her, as it did everyone in that class, to disclose the material within the parameters set by the order. To the extent SA F’s testimony touched on grand jury material in petitioner’s criminal case, we see no violation of the grand jury secrecy rule established by Rule 6(e)(2)(A)  and (B) of the Federal Rules of Criminal Procedure.” T. C. Memo. 2022-94, at pp. 24-25.

Hint to the criminal defense bar: Don’t forget IRS when you settle your case.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: