996 F.3d 526
8th Cir.2021Background
- Prelogar, CEO of Winntech, was found a “responsible person” for unpaid employment taxes; Winntech and Prelogar entered an installment agreement deferring enforcement.
- Prelogar filed a 2008 return showing a large personal tax liability but made no payments; instead, from 2009–2011 he paid large sums toward personal assets and made significant cash withdrawals from corporate accounts.
- IRS collection activity (notices, liens, levies, assignment of revenue officers) occurred from 2010 and continued through at least 2015; a criminal investigation began by 2013 and indictment was in 2017.
- Indictment (2017) charged two counts: tax evasion (26 U.S.C. § 7201) and obstruction under the Omnibus Clause of 26 U.S.C. § 7212(a), alleging use of corporate funds for personal expenses, structuring cash withdrawals, and cashing paychecks rather than depositing them.
- District court denied motions to dismiss predicated on Marinello and denied a motion alleging disclosure of privileged communications; jury acquitted on Count One, convicted on Count Two; sentence: 18 months imprisonment plus restitution.
Issues
| Issue | Plaintiff's Argument (Prelogar) | Defendant's Argument (Government) | Held |
|---|---|---|---|
| Whether Marinello requires the §7212(a) nexus and knowledge elements to be alleged in the indictment | Marinello requires allegations of a nexus to a particular administrative proceeding and knowledge that such a proceeding was pending or foreseeable, so Count Two is legally insufficient | Indictment tracked statutory language and fairly informed defendant; Marinello clarifies proof elements but does not add pleading requirements | Court: Marinello affects proof, not indictment pleading; indictment sufficient |
| Constructive amendment by failing to instruct jury on full elements of structuring | Omission of an instruction that all elements of structuring be proved allowed conviction on an uncharged offense | Jury was instructed on §7212(a) and given a definition of structuring; no authority requires separate acquittal instruction on structuring elements | Court: No constructive amendment; instructions did not alter charged offense |
| Sufficiency of evidence and scope of “due administration” under Marinello (whether IRS collection constituted a ‘particular administrative proceeding’ and whether nexus existed) | Marinello limits §7212(a) to targeted proceedings; government impermissibly relied on routine tax-collection activity | IRS engaged in sustained, targeted collection actions (not merely routine processing); defendant knew of collection activity; alleged acts occurred during/after collection actions, creating nexus | Court: Evidence sufficient; IRS actions were targeted administrative actions and nexus/knowledge satisfied or reasonably foreseeable |
| Whether prosecutors improperly obtained privileged communications (motion to dismiss/disqualify) | Interview of former counsel by prosecutors intruded on attorney-client relationship and prejudiced defense | Former counsel testified government never solicited privileged mental impressions; no privileged communications identified; no actual and substantial prejudice shown | Court: No deliberate intrusion or prejudice; denial of dismissal/disqualification affirmed |
Key Cases Cited
- Marinello v. United States, 138 S. Ct. 1101 (2018) (Omnibus Clause requires nexus to a particular administrative proceeding and defendant’s knowledge of pending or reasonably foreseeable proceeding)
- United States v. Aguilar, 515 U.S. 593 (1995) (nexus requirement for omnibus obstruction clause)
- United States v. Beckham, 917 F.3d 1059 (8th Cir. 2019) (applied Marinello; errors harmless where nexus and knowledge clearly proven)
- United States v. Graham, 981 F.3d 1254 (11th Cir. 2020) (sustained IRS collection over years can qualify as targeted administrative action)
- United States v. Collis, 128 F.3d 313 (6th Cir. 1997) (nexus requirement need not be expressly alleged in indictment)
- Rehaif v. United States, 139 S. Ct. 2191 (2019) (clarifying proof obligations does not necessarily require additional pleading where indictment tracks statutory language)
- Flores-Figueroa v. United States, 556 U.S. 646 (2009) (knowledge element clarified as to aggravated identity theft)