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Maximal justice is minimal

02 May 2008 12:39 pm

Every so often, I watch Law and Order, and see Sam Waterston twist the law somehow to catch a bad guy, and I get that happy sense of victory you do when the cinematic good guys win.

Somewhat later, reality sets in. The law isn't a game. (I know lawyers will disagree with me--so, okay, the law shouldn't be a game.) Obviously, the law is complicated, there will always be boundary cases where a hard law produces and unsatisfying result, and so forth. But we shouldn't celebrate this tendency.

I don't fault only the prosecutors, by any means--it's not clear to me why we have the exclusionary rule, rather than some other means of punishing government officials who poke their nose where it doesn't belong. The officials are, after all, not the ones who actually suffer when a guilty person goes free because they pushed the boundaries of a warrant. And I'm pretty unexcited about restricting juries from hearing various forms of evidence because it might taint their delicate little minds.

But there is a qualitative difference. A defender's job is to get his client off. A prosecutor's job is to serve the public, and the law, not to rack up convictions. Nor to find inventive ways to stack the deck against defendants. Prosecutors abuse their power, often from the best of motives, and worse, we hand them the motives by demanding jail time rather than actual justice.

Of course, it strikes a special chord in my heart when the abuser is the tax man.

From Joe Kristan:

Occasionally tax issues arise that affect many taxpayers. Tax shelters, for example, can be sold to hundreds of individuals. It doesn't make sense to issue hundreds of identical decisions. To avoid results like the 90 virtually identical Antarctica foreign earned income exclusion decisions that have been issued in the last couple of years, the IRS and taxpayers agreed to resolve a set of cases involving the "Kersting" tax shelters. After test cases were tried, the parties agreed to "stipulate" the remaining cases based on the result of the test cases.

Then the IRS attorneys decided to stack the deck. They worked out a favorable secret settlement with the taxpayers in the test case. Perhaps not coincidentally, the taxpayers then didn't defend the shelter successfully.

The Tax Court had resisted applying the secret settlement to all similar taxpayers, but following a reversal by the Ninth Circuit, they changed their mind. The Hartman decision issued yesterday ordered the IRS to apply this secret settlement to all of the taxpayers involved in the shelter to correct "a fraud on the Court." It is no small group; according to the tax court's decision yesterday: "As of Mar. 13, 2008, 1,173 Kersting project cases remained on the Court's inventory of docketed cases in which decisions have never been entered."

The court ordered the IRS to administratively adjust the accounts of all of the Kersting project taxpayers.

Paul Caron also has a long post on it, excerpting the Court's decision, which reads in part:


“Men must turn square corners when they deal with the Government.” ... “To say to these appellants, ‘The joke is on you. You shouldn’t have trusted us,’ is hardly worthy of our great Government.” To tell Kersting project petitioners they should not have trusted respondent to try the test cases honestly and fairly and the Tax Court to formulate an appropriate sanction when respondent failed to do so would be equally unworthy. ... “Wisdom too often never comes, and so one ought not to reject it merely because it comes late.” ...

Respondent’s attorneys committed a fraud on the Tax Court during the Kersting test case proceedings that was a fraud on the Court in every case bound by the results of the test cases. Extending to every petitioner whose case was bound by the results of the Kersting project test cases, by piggyback agreement or the Court’s order to show cause procedure, the benefit of the Thompson settlement strikes us as an appropriate accommodation of the competing considerations; it is a sanction for the misconduct that is consistent with Dixon V and is “no more than necessary” to maintain public trust in the judicial process that employs test case procedures. ... We are protective of the integrity of our judicial process and concerned about deterrence. We are “entitled to send a message, loud and clear.” .... We hold that sanctions should be imposed in the cases of all Kersting project petitioners in which stipulated decisions were entered on or after June 10, 1985, the date the Kersting project test case proceedings began.

In an email, Paul follows up:

As often happens in big cases (because there is no Tax Court procedure for class actions), the IRS and investors in this tax shelter agreed to try one case as the "test case" to decide the issues and then the other cases would follow it. But the IRS reached a "secret settlement" with the test case taxpayers, thereby screwing the taxpayers in the other 1,300 cases. The U.S. Court of Appeals for the Ninth Circuit exposed all of this and ordered the Tax Court to sanction the IRS by imposing the same settlement on the remaining taxpayers. But the IRS entered into settlements with some of the other taxpayers on less favorable terms (to the taxpayers), and the Tax Court in the earlier Lewis opinion refused to reopen those settlements. The Tax Court yesterday changed its mind, finding that the IRS's conduct was so sleazy that it should impose the same sanction in all 1,300 cases.

The opinion is extraordinary -- it is rare for a tax court judge to quote ethics and morality, via Aristotle, Hobbes, Rawls, in criticizing the IRS's conduct (page 74 of the opinion).

It's nice to see a court reminding the IRS that its mission is not to collect the most taxes from the most people, but to ensure that tax law is accurately and fairly applied.

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Comments (33)

Round 2: ethics complaints against all the lawyers involved. Since when can you agree to throw a case?

I know no law, but intuitively the exclusionary rule seems clear to me. That is, most other sorts of punishment allow you to trade between a desire for the guilty to be punished and whatever the punishment is. E.g., as an extreme case, if the punishment was that you should be tortured to death - still, that creates the possibility of its sometimes being worthwhile to suffer/trade such punishment in order that badly obtained evidence be admitted (for some martyr). The exclusionary rule means it's never worthwhile (assuming one is caught, I mean) to obtain evidence improperly. It most precisely (not most strongly) targets the incentive to falsely obtain evidence. That seems to me to be a generally good idea.

Random:

The problem with the exclusionary rule is that it doesn't protect the innocent. Let's say a police officer gets a tip that I'm running a grow operation in my house. (Attention DEA: I'm not.) Rather than go through the rigmarole of getting a warrant, that officer just breaks into my house during the day and starts taking pictures of my stuff and searching around, looking for evidence of a crime.

He wouldn't find any. (Though he might "find" some...) I don't have a grow operation, and there are no illegal drugs in my house. Excluding the fruits of this search means nothing, because there's nothing to exclude. I've been injured and get nothing out of the deal.

On the other hand, if I *was* running a grow op, I get the benefit of knowing that the cops are on to me and getting rid of the incriminating evidence.

I don't fault only the prosecutors, by any means--it's not clear to me why we have the exclusionary rule, rather than some other means of punishing government officials who poke their nose where it doesn't belong.
Because, as an institutional matter, it's really, really hard to punish government officials. (See e.g. the collected works of Balko, Radley)

Alex is exactly right. If we could be assured that LEOs and other officials that violate a suspect's civil rights would be properly investigated, tried and punished, then we could rely on that as a deterrent to police abuse and ditch the exclusionary rule. Since, as it is now, it's almost impossible to try and convict a LEO, even if they shoot and kill an unarmed civilian, we're pretty much stuck with it.

Also, one of the reasons I stopped watching L&O was that I was very disturbed by Waterson's character pushing the boundaries and twisting the law more and more each season to get the outcome that he thought was right.

Aric -- the idea behind the exclusionary rule is that the DEA won't illegally break into your house if they know they won't be able to convict you if you are guilty. If one assumes DEA raids are primarily motivated by the desire to convict criminals, the exclusionary rule reduces the incentive to carry out illegal raids. So it's true it doesn't punish the DEA for illegally raiding innocent people, but hopefully it does prevent the illegal raids from occurring in the first place.

Rob Lyman -- I suspect the defence lawyers were as guilty as the government lawyers of perpetrating a fraud on the court, for which they ought to be severely punished. But I don't think they violated their duty to their client by "throwing the case", because from their clients' point of view they probably got the best possible outcome.

I don't think they violated their duty to their client by "throwing the case"

I didn't say they did. What they did was dishonest, and dishonesty is a reason for sanction. In addition, because they were a "test case," they had ethical duties even to non-clients, just as lawyers running a class action do.

Aric,

But the reason your scenario doesn't actually happen is because of the exclusionary rule. There would be no point in the DEA doing that, since they couldn't gain anything from it - in fact, they would lose the possibility of getting a warrant and gaining admissible evidence. So they don't do it, and it remains a hypothetical scenario.

As "the innocent", you are in fact being protected from that search by the exclusionary rule.

I understand where Megan is coming from - you can conceive of a scenario where one cop or prosecutor gathers evidence incorrectly, and everyone loses because the guilty party is acquitted. But I believe Random is correct that the opposite boundary case is worse: whenever Law Enforcement REALLY wants to get someone, screw the rules and let somebody "take one for the team" by getting whatever evidence is needed and just accepting the punishment.

The exclusionary rule discourages bad searches by making them provide no benefit. If they provided both benefit and cost (individual punishment, rather than exclusion) then you'd have plenty of scenarios where the benefit outweighed the cost and the enforcers would just ignore the rules...

Rob Lyman -- Ah, I didn't realize there is an ethical duty for lawyers in test cases to represent the interests of non-clients. That must create a nightmare of conflicts when the government offers to settle.

I've been reading the decision, and I think I jumped to conclusions about the defence lawyer. From the decision, it doesn't seem he misled the court, it was only the IRS's lawyer.

Megan,

For a more recent, and in my mind more egregious, example of prosecutorial abuse in a tax case, take a look at the "KPMG" tax fraud case. There, the government claims KPMG partners and employees knowingly sold fraudulent tax shelters to the firm's clients. What were the prosecutors' abuses? First, the government threatened to indict KPMG (in addition to some of its partners and employees) for criminal tax fraud. KPMG was told it could avoid the criminal indictment if it would confess the firm (and the individuals involved) knowingly had engaged in criminal activity. (This "confession" would then be used against the individual defendants at trial.)

Why was this an abuse of prosecutor power -- don't prosecutor routinely agree to not prosecute one person in order to obtain testimony against another? Yes, but the consequences of an indictment on KPMG would have been manifestly different than on a typical defendant. Normally, an indictment merely starts the process by which, if ultimately convicted, a defendant will be punished. Here, issuing the indictment would have "punished" KPMG -- before it had a chance to defend itself in court. Upon indictment and for as long as the indictment remained in effect, KPMG would have been ineligible to serve as the financial auditor of most of its clients. The indictment would have bankrupted the firm overnight, just as the indictment of Arthur Andersen in the Enron case -- a case Andersen eventually won on appeal -- bankrupted that firm. (In the case of Arthur Andersen, it can be argued the DOJ did not believe the firm would be bankrupted by merely being named in the indictment. That cannot be argued in the KPMG case. Instead, it's clear the prosecutors knew the practical consequence for KPMG of being indicted. They had a gun to the firm's head and used their ability to kill the firm to extract a confession of criminal behavior.)

Second, the prosecutors also insisted the firm refuse to pay for the legal defense of its former partners and employees. This made it far more difficult for the individual defendants to put on an adequate defense.

Third, when the judge expressed concerns about the behavior of the prosecutors, the prosecutors lied about their actions.

Note: The government's actions in the KPMG case were highly unusual for another reason. In the past, the government has proven a particular tax strategy does not work before asserting that the people involved with the strategy engaged in criminal behavior. (If the tax strategy is blessed by the court, it's hard to argue that using the strategy was somehow criminal in nature.) Rather than fight the merits of the KPMG tax strategies, the government used the threat of a criminal indictment to get the firm to admit that using the strategies was criminal. (At the time the government was threatening KPMG with indictment, many tax professionals believed there was a reasonable chance the strategies would ultimately be sustained by the courts.)

The government's decision to prosecute the criminal case before the civil case may have made it easier to get its desired outcomes in both the criminal and civil cases, but it can hardly be seen as fair. Before trying someone for giving advice that was so far wrong the mere giving of the advice is a crime, shouldn't the government first have to prove the advice was wrong? By threatening KPMG with an indictment, the DOJ avoided the necessity of dealing with the merits of the tax strategies.

And my initial guess that the defendant's lawyer had mislead the court was, in fact, correct. Serves me right for posting before I'd finished reading the entire decision.

Ah, I didn't realize there is an ethical duty for lawyers in test cases to represent the interests of non-clients. That must create a nightmare of conflicts when the government offers to settle.

Actually, to be clear, I'm not 100% confident that there is such a duty. There are well-defined duties to unnamed class members in the class-action context, but Tax Court is a whole different ballgame. Still, it seems to me that if you agree to be the guy to does the test case, you're voluntarily assuming a duty to act in the interests of (or at least, not against the interests of) all the other people who probably wish they could have gotten your slot.

And yes, class-action settlements can be somewhat nightmarish, but that's on purpose. You don't want the defendant buying off the class representatives to drop the suit and leave everyone else out.

But no matter how that shakes out, somebody was dishonest and should pay for it.

Before trying someone for giving advice that was so far wrong the mere giving of the advice is a crime, shouldn't the government first have to prove the advice was wrong?

As the calls for John Yoo's head indicate, the answer is "no" in the minds of many people.

The thing that really bothered me about Law and Order was the way the detectives always, ALWAYS use extortion to get witnesses to cooperate. They're constantly threatening to sic city inspectors or Immigration or some other government agency on the witnesses they interrogate.

Actually, if the DEA busts into your house without a warrant or other justification and does a full search, you are able to sue the government for damages. This rarely happens, unless it is done out of spite, because it is hard to prove any actual damages as a result of such a violation.

As others have noted, the exclusionary rule is needed to prevent these kinds of abuse because the civil remedy is inadequate. If we really don't want the exclusionary rule, we could enact statutory damages for civil violations of the fourth amendment. So, instead of having all evidence and fruits excluded from your criminal trial, anyone whose privacy is violated could be allowed to sue for a statutory penalty, say $10,000 plus attorney fees. This is similar to what the truth in lending act does to encourage lawsuits against fraudulent lenders.

One of major problems with the exclusionary rule is that the court reads the fourth amendment very narrowly because they don't like letting criminals go free. But, if most of the cases dealing with fourth amendment violations were brought by innocent civilians, we might actually see stronger constitutional protections of our individual rights. Thus, statutory penalties have three strengths over exclusion of evidence (a) we don't let criminals go free;(b) we compensate innocent victims; and (c) we strengthen our constitutional rights.

I don't understand how this test case business works. Is there some mechanism for spreading the litigation cost around among all the affected taxpayers?

As for the ethics question, my reaction is: The ethical duties of a lawyer, since the sanctions for violations are quasi-criminal in nature, have to be wholly contained the Disciplinary Rules of the state where the lawyer is admitted. If they spell out a duty to the "similarly-situated" taxpayer, then there is one; otherwise, the lawyer's duty is to the individual client. (And to the court, but that comes under a separate heading.)

It seems as though the whole issue could be resolved by making the class-action rules and procedures apply, modified as the peculiarities of the tax business might suggest. But I know nothing about it.

So, instead of having all evidence and fruits excluded from your criminal trial, anyone whose privacy is violated could be allowed to sue for a statutory penalty, say $10,000 plus attorney fees.

Again though, my worry would be that in high priority cases (say organized crime) the police chief would just bust into your home at 2 am and say:
"My boys are gonna turn this place upside down and take whatever we think is incriminating. Would you like your $10,000 in cash, or will you take a check?"

If your gut response is "good, we need to get those organized crime bosses", retry the example with the political opponent of mayor/police chief/DA as the victim. Sure, we're violating your fourth amendment rights, but here's a small check that'll make it all better.

Here is a tax insanity story for you, one that a friend of mine is currently involved in.

The IRS says that my friend owes money on interest on a bank account that she doesn't have. In order to prove that she doesn't have the account, she needs to provide the IRS with a written statement from bank, stating that she does not have the account. The bank refuses to provide precisely what the IRS demands because of privacy reasons. They will show her a screen that says that she does not have the account, but they refuse to print it. They have taken a screen shot and faxed it to her, but this does not satisfy the IRS. The bank insists that it's not their fault that the IRS has this faulty information about the accounts, nor is it their responsibility to fix it. The IRS insists that the bank provided them with faulty information about her accounts, and until they get the bank to correct the information about her account information, she is in default with the IRS, and is now red-flagged for routine audits.

I should note that this friend is, like me, in graduate school and earning a sub-poverty wage. She owes the IRS over $600, which to us is a pretty big deal, and which keeps growing with interest.

Ridiculous.

All my fellow students at law school had the same problems with the Exclusionary Rule. So the professor challenged us to come up with an alternative. As hard as we tried, we couldn't come up with anything that would work as well to disincentivize LEO's from conducting illegal searches.

As for the unethical lawyers, the bottom line consideration that any Disciplinary Committee has to consider is: Is the laywer fit (worthy) to practice law? That's what all the disciplinary rules come down to. There are minor violations to the DR's and major violations. Minor violations result in a public reprimand, slightly more severe viiolations result in public reprimands with terms (usually additional education on how to keep accounts properly), and so on through suspensions of the license to practice law for periods ranging from one month to several years, to total revocation of the license.

Fraud on the court is extremely serious, and these jokers ought to have their licenses revoked.

Regarding Mary's horror story: On the facts as stated, it appears to be the bank that is acting unreasonably. Whose privacy concerns could possibly be at issue besides those of Mary's friend, which she can waive?

Regarding Mary's horror story: On the facts as stated, it appears to be the bank that is acting unreasonably. Whose privacy concerns could possibly be at issue besides those of Mary's friend, which she can waive?

By disclosing who owns the account in question, the bank would be violating the privacy rights of the actual owner. I suspect the IRS wants the bank to say something more than: Mary's friend doesn't own this account. They believe that she does and will require confirmation that someone else does own the account before changing their mind.

I suspect the IRS wants the bank to say something more than: Mary's friend doesn't own this account.

Gee, shouldn't the bank be doing that already as part of its 1099 disclosures to the IRS? If it's not a violation of Mary's privacy to disclose her to the IRS, how is it a violation of the true owner's privacy to do exactly the same thing?

The bank shouldn't tell Mary who the true owner is, of course, but she doesn't care, does she?

For that reason, I'm sure there is more to this story.

Not Mary, Mary's friend. Whatever. The IRS should still have the info it wants automatically.

I think another reason for going for the exclusionary principle as opposed to punishing LEOs who do wrong is that it helps reduce the incentive to violate rights while not making it attractive to just do a crossword puzzle instead of investigating. After all, if you risk going to jail for improperly conducting searches, especially if a good lawyer can keep the appearance of impropriety up long enough to have you running up big legal bills, the easiest way to avoid the liability is to reduce the number of searches you do.

It's the same thing as no-knock warrants. It's easy to say from the sidelines that you should knock, announce yourself, and then politely enter. It's another when you're faced with the tactical situation of standing motionless in a doorway and advertising your presence when someone with an automatic weapon might be on the other side. Doors are colloquially called "The Funnel of Death" in urban combat for a reason.

I'll disagree slightly - just as it's a defence attorney's job to secure acquittals, it's a prosecuting attorney's job to secure convictions. They're advocates, not dispensers of justice - that's the job of the judge and jury, not the lawyers. Obviously, I'm opposed to misconduct by anybody, be it by lying, intimidation of witnesses, or whatever, but it's not misconduct to work to achieve convictions within the law, it's their job.

Alsadius, prosecutors have discretion over whether or not to seek an indictment or an information based on the evidence police have gathered. The consequences of the process are hideous even for innocent defendants acquitted at trial. They damn sure better understand themselves as dispensers of justice, carefully weighing the evidence and bringing only cases where they themselves are free of reasonable doubt.

So, the end result of this IRS misconduct is that the government gets less tax than it should from all involved? How convenient.


Please tell me the the actual individuals in the IRS who made these decisions will suffer some actual punishment? One of the troubling aspects of our society is how often organizations and corporations our treated as actors who can be punished, rather than punishing the individuals who perform the offending acts.

Rob (not Lyman),

Actually, if the DEA busts into your house without a warrant or other justification and does a full search, you are able to sue the government for damages. This rarely happens, unless it is done out of spite, because it is hard to prove any actual damages as a result of such a violation.

Searches are often quite destructive to the premises.

If you got an offer to settle and were a test case, you take the offer and withdraw the case and let somebody else be the test.

What is wrong here is they took the settlement TO throw the case.

One would hope that the people involved would get fired... who knows though.

The exclusionary rule isn't about punishing government officials. Nor, for that matter, is the 4th amendment. The 4th amendment says to the government, you can't do this, period.

So when it comes time for trial, if you let in evidence obtained by means the government can't use, then, you ARE allowing the government to do it. Because the only reason to gather evidence is for use at trial. And the constitution says the government can't do that (in violation of the 4th amendment).

To use a simple analogy, say you are playing monopoly (with the game and its rules representing a trial and its rules). The rules of monopoly say you can't just take money from the bank as if it were yours, you have to earn it through the course of the game (like by passing go). That means you can't do it, period. You do not suddenly get to get around that rule by saying that some official who works for you broke that rule, and hey, we'll punish him, but I still have the money and I'm keeping it. As far as the rules of the game go, you never had that money, so you can't use it in the game. You can't say "well, I have it now, and we can deal with those who gave it to me illegitimately later, but since now the money is in my possession I can play it."

Same with the fourth amendment. As far as the rules of the game go, the government never had that evidence - so it can't "play" it at trial. You can't violate the rules (the constitution) and get around that no matter how many government officials you might punish. Whether anyone is punished or not, the rules of the game (the Constitution) says the government cannot get evidence like that. Period. That is totally meaningless if the government could use it anyway, just like it would be totally meaningless ot have a rule in Monopoly that you can't just take money from the bank if you could use it once you got it if some other official screwed up and violated that rule. The whole point of it is the use.

All my fellow students at law school had the same problems with the Exclusionary Rule. So the professor challenged us to come up with an alternative. As hard as we tried, we couldn't come up with anything that would work as well to disincentivize LEO's from conducting illegal searches.

Canada approaches this problem somewhat differently: its Charter of Rights and Freedoms sets out a quasi-exclusionary rule (it's possible that unconstitutionally-gathered evidence might be admitted, and it's possible that things held to be unreasonable searches or seizures might nonetheless be constitutional under s. 1), but also explicitly authorizes other sanctions for constitutional violations (e.g. damages, charges being stayed or quashed):

1. The Canadian Charter of Rights and Freedoms guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.

8. Everyone has the right to be secure against unreasonable search or seizure.

24. (1) Anyone whose rights or freedoms, as guaranteed by this Charter, have been infringed or denied may apply to a court of competent jurisdiction to obtain such remedy as the court considers appropriate and just in the circumstances.
(2) Where, in proceedings under subsection (1), a court concludes that evidence was obtained in a manner that infringed or denied any rights or freedoms guaranteed by this Charter, the evidence shall be excluded if it is established that, having regard to all the circumstances, the admission of it in the proceedings would bring the administration of justice into disrepute.

I'll disagree slightly - just as it's a defence attorney's job to secure acquittals, it's a prosecuting attorney's job to secure convictions. They're advocates, not dispensers of justice - that's the job of the judge and jury, not the lawyers. Obviously, I'm opposed to misconduct by anybody, be it by lying, intimidation of witnesses, or whatever, but it's not misconduct to work to achieve convictions within the law, it's their job.

No, it isn't, or shouldn't be - the prosecutor's job to secure a conviction, at least not in the way that it is the defending attorney's job to secure an acquittal (although that is not exactly the case either). It should be the proseutor's job to present the most accurate case for convicting the defendant. There is a difference.

The prosecutor has to disclose evidence in a way that the defense does not. The prosecutor should not ignore evidence that suggests innocence, while the defense attorney can ignore evidence that is incriminating. Etc., etc.


The problem with not having an exclusionary rule is that it would increase the risk of police planting evidence, in order to make an illegal search on an innocent person seem more worthwhile. Besides, the exclusionary rule does not mean that civil damages (and perhaps criminal charges in some cases) cannot be brought against the police who violate rights; it is just an automatic extra protection.

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