December 2017 Preview | Marinello v. United States

Case No. 16-1144 | 2nd Cir. Decision

The Internal Revenue Code provides that “whoever corruptly or by force . . . endeavors to intimidate or impede any officer . . . of the United States acting in any official capacity under this title or in any other way corruptly or by force . . . endeavors to obstruct or impede[] the due administration of this title, shall, upon conviction thereof, be fined not more than $5,000 or imprisoned not more than 3 years or both. 26 U.S.C. § 7212(a). The circuit courts have interpreted the statute differently. The majority of circuits, namely the First, Second, Ninth, and Tenth, hold that a defendant may be guilty even if he has no knowledge of a pending IRS action or investigation against him, or even if there is no pending action or investigation against him. The Sixth Circuit requires the government to prove that a defendant obstructed a pending IRS action or investigation about which he had knowledge.

Mr. Marinello owned and operated a freight service business in New York that shipped items between the United States and Canada. For almost twenty years, Mr. Marinello failed to keep business records or file corporate or personal income tax returns. Unbeknownst to Mr. Marinello, the IRS began investigating Mr. Marinello in 2004, but closed the investigation because it could not determine whether the income that went unreported was significant. The IRS reopened its investigation in 2009, and during an interview, Mr. Marinello admitted his failure to file tax returns, his mingling of business and personal income, and his destruction of bank statements and business records. He was charged with nine counts, one count under 22 U.S.C.§ 7212(a) in 2012 and convicted in 2014. Mr. Marinello appealed to the Second Circuit, arguing that the government did not prove the requisite knowledge in § 7212(a).

Mr. Marinello argues that the interpretation of the First, Second, Ninth, and Tenth Circuits that removes a requirement for the government to prove knowledge of an IRS action or investigation is too broad. He argues that this interpretation turns the provision into a general prohibition on any conduct that hinders the IRS in any way. For example, Mr. Marinello argues that even “throwing away a business receipt” could be considered felonious conduct because it would obstruct the IRS’s ability to assess or collect taxes. The Second Circuit argued that the absence of proving knowledge would not broaden the statute because the government still had to prove that the defendant acted corruptly. Mr. Marinello argues that the Supreme Court should accept the Sixth Circuit’s interpretation because it is in line with prior decisions. The Court already recognizes the need to “exercise restraint in assessing the reach of a federal criminal statute, . . .” e.g., United States v. Aguilar, 515 U.S. 593, 600 (1995), and has cabined other statutory “catchall’ provisions. The government argues that the plain language of the statute does not state that an IRS proceeding or investigation must be underway when a defendant acts corruptly, thus there should not be a knowledge requirement.

The Court in recent years has rejected overbroad obstruction of justice statutes, likely to protect defendants from an abuse of prosecutorial discretion. While it is assumed that prosecutors will bring obstruction of justice charges against defendants who really obstruct justice, the Court has shown that it is concerned with the potential for these omnibus provisions to attach to much more than Congress intended. Mr. Marinello’s case will be added to the growing line of jurisprudence related to this issue, and it will be interesting to see whether the Court applies its reasoning from prior decisions, or decides that the majority of the circuits are correct.