United States v. Coplan
2012 U.S. App. LEXIS 24613
| 2d Cir. | 2012Background
- Four Ernst & Young partners/employees (Coplan, Nissenbaum, Shapiro, Vaughn) were convicted in SDNY for developing and defending five tax shelters (CDS, COBRA, Add-On, PICO; Tradehill) between 1999–2001; Bolton pleaded guilty to one conspiracy charge.
- The government pursued a broad Klein conspiracy theory under 18 U.S.C. § 371 to defraud the United States by impairing the IRS, plus tax evasion and false statements charges related to Add-On and other shelters.
- The district court trial spanned 10 weeks, with Add-On being the only shelter charged with tax evasion; the others were involved in audits, defenses, and alleged cover stories.
- The majority reverses Shapiro and Nissenbaum on Count One (Klein conspiracy) and Count Four (obstruction) and reverses Shapiro and Nissenbaum on Counts Two and Three (tax evasion) based on sufficiency, while affirming Coplan and Vaughn and Bolton’s sentence (with Bolton’s $3M fine vacated and remanded).
- Venue and evidentiary issues arising on Count Six (Vaughn’s false statements deposition) and coconspirator statements were resolved in favor of the government or affirmed as proper; the Taylor testimony was admitted; no prosecutorial misconduct found.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Klein conspiracy liability under § 371 | Klein doctrine follows Haas/Hammerschmidt lineage; broad defraud clause. | Klein is a common-law conception not grounded in statute; overbroad. | Klein conspiracy valid as a circuit doctrine; rejected challenge. |
| Sufficiency to prove Count One (Klein conspiracy) for Shapiro | Evidence showed Shapiro participated in schemes and aided concealment. | Evidence insufficient to prove beyond reasonable doubt Shapiro joined the conspiracy with the requisite intent. | Conviction on Count One reversed for Shapiro. |
| Sufficiency to prove Counts Two and Three (tax evasion) for Shapiro | Shapiro involved in development/defense of Add-On; foreseen evasion. | Insufficient evidence of intent or affirmative act by Shapiro. | Convictions on Counts Two and Three reversed for Shapiro. |
| Sufficiency to prove Count Four (obstruction) for Nissenbaum | Nissenbaum reviewed Add-On documents; knowledge and involvement shown. | Record shows equivocal evidence; no direct act tying him to obstructions. | Count Four reversed for Nissenbaum. |
| Venue for Count Six (Vaughn’s deposition statements) under § 1001 | Statements made in Tennessee continued and affected NY IRS proceedings; venue proper. | Venue should be limited to Tennessee where deposition occurred. | Venue proper in SDNY; statements continued to influence NY proceedings. |
Key Cases Cited
- Haas v. Henkel, 216 U.S. 462 (1910) (defraud statute broad, includes impairing government functions by deceit)
- Hammerschmidt v. United States, 265 U.S. 182 (1924) (conspiracy to defraud requires deceit or dishonest means)
- United States v. Klein, 247 F.2d 908 (2d Cir.1957) (origin of Klein conspiracy; concealment and defrauding gov't concept)
- Dennis v. United States, 384 U.S. 855 (1966) (conspiracy to defraud includes obstructing lawful government functions)
- Candella v. United States, 487 F.2d 1223 (2d Cir.1973) (venue for false statements under §1001; continuing offense reasoning)
- Ramirez v. United States, 420 F.3d 134 (2d Cir.2005) (venue where statements continued to be false and in federal jurisdiction)
- United States v. Ali, 68 F.3d 1468 (2d Cir.1995) (materiality element of §1001; essential conduct elements)