In Re United States of America, United States of America v. Michael Clemente

608 F.2d 76, 1979 U.S. App. LEXIS 11008

• Court: Court of Appeals for the Second Circuit
• Decided: October 22, 1979
• Docket: 1422, Docket 79-3051
• Status: Published

Opinions

NEWMAN, Circuit Judge:

The United States seeks a writ of mandamus in advance of trial in this criminal case to challenge the trial court’s interpretation of 18 U.S.C. § 3237(b) concerning venue for prosecution of certain internal revenue offenses.

The original indictment charged defendant Michael Clemente and ten others with racketeering, extortion, labor pay-offs, and tax evasion. Ten counts charged Clemente with income tax offenses in violation of 26 U.S.C. §§ 7201 and 7206(2) for the years 1973-1977. Each of the § 7201 counts alleged an attempt to evade taxes by signing and mailing a false income tax return, and the making of these returns was also alleged to be in violation of § 7206(2). The indictment alleged venue in the Southern District of New York. Relying on 18 U.S.C. § 3237(b),¹ Clemente moved to have the tax counts transferred to his district of residence, the Eastern District of New York. He submitted an affidavit stating that his tax returns for the years in question had been transmitted to the Internal Revenue Service by mail. Clemente’s affidavit indicated that the returns were mailed from his residence within the Eastern District of New York to an I.R.S. Office also located in the Eastern District.

The Government resisted the motion, contending that it would establish venue for the tax counts in the Southern District of New York on the basis of the preparation of the tax returns and other acts of evasion in that District.² Though the Government contended that Clemente’s accounting firm prepared the returns in the Southern District and mailed them to his residence in the Eastern District for signing, it represented that neither the mailing of the returns nor of any other items will be used to establish venue in the Southern District. The Government read § 3237(b) to permit the defendant to elect trial of tax counts in his district of residence only when a mailing is used to establish venue elsewhere.

The District Court (Hon. Leonard B. Sand, Judge) granted Clemente’s motion to transfer venue for the tax counts to the Eastern District of New York. Judge Sand concluded that the tax counts fall within the statutory definition of an offense that “involves use of the mails” because in fact the mails were used in the course of activity alleged to be unlawful. This broad, though arguably literal, reading of the statute has been accepted by other district courts, United States v. DeMarco, 394 F.Supp. 611 (D.D.C.1975); United States v. Youse, 387 F.Supp. 132 (E.D.Wis.1975); see also United States v. Turkish, 458 F.Supp. 874, 878 n.5 (S.D.N.Y.1978); United States v. Dalitz, 248 F.Supp. 238 (S.D.Cal.1965), though the issue does not appear to have been considered by any appellate court.³ The Government responded with a superseding indictment, which charged Clemente with all of the same offenses, including, in Counts 200-209, the income tax offenses; as redrafted, however, the tax counts omitted any reference to the mailing of a tax return. Clemente again moved to transfer the tax counts. Judge Sand granted the motion, having previously indicated that § 3237(b) was applicable even if a mailing was not alleged in the indictment. The Government seeks a writ of mandamus to test the trial court’s construction.

Section 3237(b) was added to the Criminal Code in 1958, P.L. 85-595, 72 Stat. 512 (1958). It is an exception to § 3237(a), which permits prosecution of continuing offenses in any district in which the offense was begun, continued, or completed. Section 3237(a) also specifically provides that any offense involving use of the mails is within the category of continuing offenses and may be prosecuted in any district from, through, or into which the mail moves.

Section 3237(b) provides that for certain offenses a defendant has an option to require prosecution in the district of his residence. The circumstances in which the option applies are “where an offense is described in section 7203 of the Internal Revenue Code of 1954, or where an offense involves use of the mails and is an offense described in section 7201 or 7206(1), (2), or (5) of such Code . . . .” Since the tax counts of the pending indictment charge Clemente with violations of §§ 7201 and 7206(2), the availability of the residence venue option depends upon whether these counts charge an offense that “involves use of the mails” within the meaning of § 3237(b).

There are at least three possible interpretations of the phrase “involves use of the mails.” Most broadly, the phrase could apply to an offense in the course of which a mailing occurred. More narrowly, the phrase could apply to an offense in which a mailing not only occurred but is also an element of the crime charged.⁴ Most narrowly, the phrase could apply to an offense in which a mailing not only occurred but is also the basis on which the prosecution seeks to establish venue.

Since the statutory language does not unambiguously require any one of these three interpretations, it is appropriate to resort to available indications of legislative intent. Chief among these is the “mischief to be corrected,” an important guide to statutory interpretation and one that Justice Cardozo relied upon to avoid a reading that would “stick too closely to the letter” of a statute. Warner v. Goltra, 293 U.S. 155, 158-59, 55 S.Ct. 46, 48, 79 L.Ed. 254 (1934); see also In re Letters Rogatory, 385 F.2d 1017, 1020 (2d Cir. 1967) (“The amendment must be interpreted in terms of the mischief it was intended to rectify.”).

The mischief to be corrected by § 3237(b) was the prosecution of a taxpayer at a great distance from his residence simply because his tax return had been mailed to an Internal Revenue Service office located in a district remote from the taxpayer’s district of residence. Congressman Prince H. Preston, who introduced the bill, H.R. 8252, 85th Cong., 2d Sess. (1958), that became § 3237(b), told a House Judiciary Subcommittee hearing of the unfairness of requiring a defendant from Savannah, in the Southern District of Georgia, to defend in Atlanta, in the Northern District of Georgia, solely because the Collector’s office was located in Atlanta. Hearings on H.R. 8252 Before Subcommittee No. 4 of the House Committee on the Judiciary, 85th Cong., 2d Sess. 7, 10-12 (Apr. 25, 1958) (unpublished). The Subcommittee also heard similar complaints on behalf of District of Columbia taxpayers required to defend in the District of Maryland because their returns were mailed to Baltimore. Id. at 27. Reading the statute to apply only when the prosecution uses a mailing to establish venue in a district other than the district of the defendant’s residence fully meets the problem that concerned the Congress.

There are additional indications that Congress did not intend the occurrence of any mailing in the course of an offense to provide the defendant with the option to transfer venue to his district of residence. Congressman Preston told the subcommittee hearing, “The bill would not cover situations where the use of the mails is not an ingredient of the offense charged.”⁵ Id. at 6. Moreover, both the House and Senate reports observed that “in the type of case covered by this bill, the acts for which the defendant is really being tried are generally committed in the district in which he resides and certainly bear little or no relationship to the place where his tax return is received.” H.R.Rep.No. 1890, 85th Cong., 2d Sess. (1958); S.Rep.No. 1952, 85th Cong., 2d Sess. 2 (1958), reprinted in [1958] U.S. Code Cong. & Admin.News, pp. 3261, 3262. That observation surely excludes a prosecution like Clemente’s since the Government is undertaking to prove that his criminal conduct, not the receipt of any mailed item, occurred in the Southern District of New York. There is no indication that Congress intended to give a taxpayer the option to be tried in his district of residence when it is his criminal conduct and not the use of the mails that the Government relies upon to establish venue elsewhere.

Furthermore, when Congress selected subsections of § 7206 of the Internal Revenue Code to which § 3237(b) would apply, it included only subsections (1), (2) and (5), which are the ones where the mailing of a return might otherwise be used to force a taxpayer to defend far from his district of residence. Omitted were subsections (3) and (4); these subsections cover offenses in which some use of the mails might occur, but not a mailing to some distant I.R.S. office where a return is to be filed.

Finally, a construction of § 3237(b) that relies upon any mailing in the course of an offense should be rejected because it leads to bizarre results unlikely to have been intended by Congress. In a multi-defendant case such as this, where the Government alleges that the evidence of defendant’s racketeering is also evidence of his receipt of unreported income, a transfer of the tax counts to the district of residence would mean that the witnesses would bear the inconvenience and the public would bear the cost of two substantially similar trials, in the event that either all counts against Clemente or only the tax counts against him were transferred. A broad reading of the statute also leads to unintended results in cases involving only one defendant. Consider the defendant who earns unreported income in District A, has his tax return prepared in District A, and files his return in District A because an I.R.S. service center is located there. Under a broad reading of the statute, he could obtain a transfer to District B, his residence, simply because his accountant mailed him his return for signature, even though filing was accomplished by hand delivery. Or a defendant could obtain the same result whenever he could allege that the mails were used in some connection with obtaining income, even though the item mailed was not the tax return.⁶ Thus interpreted, the statute would cover virtually all violations of § 7201. Congress could not have intended this result because it used the phrase, “involves use of the mails,” as a modifier to limit the § 7201 violations to which § 3237(b) applies.

We conclude that the “involvement” of the mails that Congress intended was not the bare occurrence of a mailing during the course of the alleged offense. Congress was legislating an exception to a venue statute that permitted the Government to use the fact of a mailing into a distant district to prosecute a taxpayer far from his residence. The exception of § 3237(b) is a shield against that governmental power. It is not a sword enabling the taxpayer to transfer prosecution to his district of residence in cases such as this where the Government seeks to establish venue wholly apart from any use of the mails. The statute does not enable a taxpayer who has violated the law in a district by means other than use of the mails to escape prosecution in that district simply by mailing a letter. We construe § 3237(b) to apply, at most, to tax prosecutions that involve the use of the mails in the sense that a mailing, whether or not alleged in the indictment, is the basis on which the prosecution seeks to establish venue in a district other than the taxpayer’s district of residence.⁷ Under this construction of the statute, Clemente’s motion to transfer venue of the tax counts should have been denied.

We also conclude that this is an appropriate case for the issuance of a writ of mandamus to correct the District Court’s construction of § 3237(b). The District Court did not purport to exercise discretion, but felt obliged to transfer the tax counts. This transfer was beyond the power created by Congress. Correction by mandamus is especially appropriate here since the United States cannot otherwise secure appellate review of the District Court’s ruling. Cf. Helstoski v. Meanor,-U.S.-,-, 99 S.Ct. 2445, 61 L.Ed.2d 30 (1979); United States v. Weinstein, 511 F.2d 622 (2d Cir.), cert. denied, 422 U.S. 1042, 95 S.Ct. 2655, 45 L.Ed.2d 693 (1975).

A writ of mandamus will issue directing the District Court to vacate its order transferring Counts 200-209 of the indictment. In view of the impending trial, the mandate shall issue forthwith.

1 . Section 3237 provides:

(a) Except as otherwise expressly provided by enactment of Congress, any offense against the United States begun in one district and completed in another, or committed in more than one district, may be inquired of and prosecuted in any district in which such offense was begun, continued, or completed. Any offense involving the use of the mails, or transportation in interstate or foreign commerce, is a continuing offense and, except as otherwise expressly provided by enactment of Congress, may be inquired of and prosecuted in any district from, through, or into which such commerce or mail matter moves.

(b) Notwithstanding subsection (a), where an offense is described in section 7203 of the Internal Revenue Code of 1954, or where an offense involves use of the mails and is an offense described in section 7201 or 7206(1), (2), or (5) of such Code (whether or not the offense is also described in another provision of law), and prosecution is begun in a judicial district other than the judicial district in which the defendant resides, he may upon motion filed in the district in which the prosecution is begun, elect to be tried in the district in which he was residing at the time the alleged offense was committed: Provided, That the motion is filed within twenty days after arraignment of the defendant upon indictment or information.

2 . Unless § 3237(b) applies to this case, it is clear that venue for tax offenses is properly laid in the district in which the returns were prepared. United States v. Gross, 276 F.2d 816, 819-20 (2d Cir.), cert. denied, 363 U.S. 831, 80 S.Ct. 1602, 4 L.Ed.2d 1525 (1960). Since the Government seeks to establish venue in the Southern District because the allegedly fraudulent returns were prepared there, we have no occasion at this point to consider what other acts of evasion might also suffice to establish venue.

3 . On two occasions footnotes to opinions of this Court have stated that a taxpayer charged with income tax evasion outside his district of residence may elect by virtue of § 3237(b), to be tried in the district in which he was residing at the time of the alleged offense. United States v. Slutsky, 487 F.2d 832, 839 n.9 (2d Cir. 1973), cert. denied, 416 U.S. 937, 94 S.Ct. 1937, 40 L.Ed.2d 287 (1974); United States v. Gross, 276 F.2d 816, 820 n.1 (2d Cir.), cert. denied, 363 U.S. 831, 80 S.Ct. 1602, 4 L.Ed.2d 1525 (1960). Both Slutsky and Gross upheld venue in the district where the tax returns were prepared, rejecting contentions that venue could be laid only in the district where the return was either signed and sent (Gross) or received (Slutsky). Neither defendant sought to invoke the transfer option of § 3237(b), and thus this Court had no occasion to consider the scope of the option nor to construe the qualifying phrase “involves use of the mails.”

4 . This second category would presumably include not only offenses where the mailing is alleged in the indictment as an element of the offense but also those where the alleged element, e. g., the attempted willful evasion by means of submission of a fraudulent tax return, was in fact accomplished by mailing the return.

5 . This point was made in reference to the original version of H.R. 8252, which established venue solely in the district of the taxpayer’s residence, rather than affording the taxpayer an option to transfer to that district. The comment is thus subject to the interpretation that it was made to answer the expressed objection of the Treasury Department that Sixth Amendment problems would be encountered if venue were laid in the district of residence even if no element of the offense occurred there. See letter from Dan Throop Smith, Deputy to the Secretary, to Hon. Emanuel Celler (Apr. 23, 1958), reprinted in S.Rep.No. 1952, 85th Cong., 2d Sess. 4 (1958), reprinted in [1958] U.S.Code Cong. & Admin.News, pp. 3261, 3264. Even if Congressman Preston was responding to this objection, he was nonetheless assuring his listeners that his bill did not broadly cover all offenses in which a mailing occurred. While the bill was amended to make the transfer to this district of residence optional, the key phrase to be construed, “involves use of the mails,” is identical in both the initial version of H.R. 8252, on which Congressman Preston testified, and the enacted version. The original and amended versions of H.R. 8252 are set out at 104 Cong.Rec. 13064 (1958).

6 . The dissent suggests that § 3237(b) covers at least a case like Clemente’s where the item mailed was a tax return sent to the I.R.S. That mailing originated and ended in Clemente’s district of residence, and neither it nor any other mailing is relied upon by the Government to establish venue in the district of prosecution. If the statute’s option were available simply because a taxpayer mailed his return to an I.R.S. office within his district of residence, then a further anomalous distinction would have been created by the statute. Of those taxpayers, like Clemente, who are accused of committing acts of evasion in a district other than the district of residence and whose I.R.S. office is located within the district of residence, the ones who mailed the tax return could demand transfer of prosecution to the district of residence, while the ones who saved postage and delivered the return by hand to a nearby office would face prosecution in the district where their acts of evasion occurred. This anomaly further indicates that what triggers the transfer option is not the fact of a mailing nor the nature of what is mailed but whether a mailing is used by the Government to prosecute a taxpayer away from his district of residence.

7 . Since in this case the Government does not rely on the mailing of any item to establish venue in a district other than the taxpayer’s district of residence, it is unnecessary to decide whether the statute would be available when the Government seeks to establish venue on the basis of any mailing or only on the basis of a mailing to an office of the I.R.S. The latter situation is the one contemplated by Congress, and is the one in which the place where the mailing is received is determined by the convenience of the Government in locating I.R.S. offices, rather than by the defendant’s choice in selecting those to whom he wishes to correspond. If, pursuant to § 3237(a), venue could be established by a mailing other than a mailing to an I.R.S. office, it remains an open question whether in enacting § 3237(b), Congress intended to let tax defendants avoid prosecution in a distant district into which they mailed an item not addressed to the I.R.S.