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United States v. Moleski

United States District Court, Third Circuit

January 13, 2014



FREDA L. WOLFSON, District Judge.

Pro se defendant David Moleski[1] ("Defendant") was charged with various counts of mail, wire, and tax fraud relating to an alleged scheme to defraud the Internal Revenue Service ("IRS") and private creditors, by means of, inter alia, materially false and fraudulent representations on his tax forms and certain financial instruments. Specifically, Defendant was charged with 14 counts of mail fraud, in violation of 18 U.S.C. § 1341; one count of wire fraud, in violation of 18 U.S.C. § 1343; one count of corruptly endeavoring to obstruct and impede the Internal Revenue Laws, in violation of 26 U.S.C. § 7212(a); and three counts of submitting false claims for refund, in violation of 18 U.S.C. § 287. Before the Court are a multitude of pre-trial motions filed by both Defendant and the Government.[2] For the reasons set forth herein, Defendants' motions are DENIED in their entirety, and the Government's motions are GRANTED.


s 1 through 15 charge the Defendant with mail and wire fraud. These counts are premised on a scheme by which Defendant allegedly attempted to fraudulently eliminate debts and filed false claims for tax refunds from about February 15, 2008 through about June 23, 2009. The Superseding Indictment (the "Indictment") alleges that Defendant mailed to the Department of Treasury fake financial instruments that purported to open accounts at the Treasury. Defendant then attempted to use those accounts to satisfy personal debts. Then, Defendant allegedly mailed to creditors fake financial instruments, entitled Secured Promissory Notes, that supposedly drew on the Treasury accounts in order to satisfy credit card debts and to satisfy tax judgments issued against him. The Government further accuses Defendant of mailing copies of the notes in question to the Treasury and instructed it to satisfy the debts held with the creditors. Additionally, Defendant allegedly mailed fraudulent correspondence to a credit reporting agency wherein he represented that the debts held with various creditors were paid in full.

In Counts 17 through 19, the Government accuses Defendant of fraudulently sending IRS false claims for tax refunds in an attempt to secure money from the United States. To this end, Defendant allegedly sent to private creditors false IRS forms which falsely claimed that Defendant received from them a certain type of income called "original issue discount" for tax years 2006 through 2008. Using those income figures reported on the IRS forms, Defendant then allegedly mailed to the IRS false tax returns for the tax years 2006 and 2007 which claimed large fraudulent refunds. In a similar fashion, Defendant also filed an allegedly false tax return for tax year 2008.

Count 16 of the Indictment charges Defendant with corruptly endeavoring to obstruct and impede the due administration of the federal tax laws. The Indictment alleges that Defendant, among other things, instructed a private creditor not to comply with a notice of levy issued to it by the IRS; filed the above-mentioned false and fraudulent tax returns for tax years 2006 through 2008; submitted to the IRS obstructive correspondence wherein Defendant refused to pay taxes due; and sent fraudulent correspondence to the IRS in order to extinguish tax debts against allegedly non-existent treasury accounts.


I. Government's Motions

A. Motion to Exclude Tax Defier Arguments

According to the Government, while this case was still in the grand jury investigation stage, Defendant sent a letter to the grand jury foreperson which accused the Government of concealing evidence and demanded that the Court, Clerk of the Court, the Government and grand jurors produce their financial records to Defendant. Then, Defendant filed a series of motions which relate to Defendant's personal views on the tax laws of this country. More specifically, it is Defendant's position that the Government only has jurisdiction to prosecute crimes in which it has land ownership and that the Sixteenth Amendment - Congress' taxing power - is invalid. Based on these arguments, the Government anticipates that Defendant will seek to espouse his personal tax views before the jury at trial. In that connection, the Government requests to preclude Defendant from presenting to the jury (1) any evidence or arguments in support of Defendant's position that the federal tax laws, including the IRS code or portions thereof, are invalid or otherwise unconstitutional; (2) evidence relating to alternate interpretations of the federal tax laws; (3) any challenges to this Court's jurisdiction or to the Court's authority to preside over this matter.

In response, Defendant cites a litany of Supreme Court cases claiming that he has a constitutional right to rely on those cases. However, it is difficult to determine the relevance of those cases to Defendant's position. Suffice to say, it appears that Defendant argues that he has an unfettered right to present any Supreme Court precedent he wishes before the jury, and that the Government's request to restrain him from doing so violates the constitution. Because the Court finds that Defendant's position on these various issues would confuse the jury, and more importantly, invade this Court's province in instructing the jury on the law, the Government's requests are granted.

To begin, Federal Rule of Evidence 402 sets forth the backdrop for the admissibility standard for "all relevant evidence, " defined in Rule 401 as "evidence having any tendency" to make "more probable or less probable" the existence "of any fact that is of consequence to the determination of the action." Elcock v. Kmart Corp., 233 F.3d 734, 756 n. 13 (3d Cir. 2000); see Fed.R.Evid. 402, 401. Moreover, Rule 403 affords the district court the discretion to exclude relevant evidence "if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury." Fed.R.Evid. 403.

It appears that Defendant contends that federal tax laws are unconstitutional and thus, invalid However, courts have routinely excluded evidence and arguments similar to those advanced by Defendant in this case because they are not legally sound. With regard to Defendant's assertion that the United States only has jurisdiction to prosecute crimes in which it has land ownership, that frivolous argument has been squarely rejected by many courts, and it needs no further explanation from this Court. See United States v. Cooper, 170 F.3d 691 (7th Cir. 1999); United States v. Mundt, 29 F.3d 233, 237 (6th Cir. 1994)(rejecting defendant's frivolous argument that "the District Court lacked jurisdiction over him because he is solely a resident of the State of Michigan and not a resident of any federal zone'"); United States v. Collins, 920 F.2d 619, 629 (10th Cir. 1990)(same). Accordingly, to the extent Defendant seeks to introduce this argument at trial before the jury, he is precluded from doing so.

To the extent that Defendant seeks to introduce any arguments or "evidence" that the federal tax laws are unconstitutional or that the Sixteenth Amendment does not provide Congress the power to levy tax, those arguments are also precluded from being introduced at trial. Indeed, these identical contentions have been routinely rejected by courts. See United States v. Indianapolis Baptists Temple, 224 F.3d 627, 629 (7th Cir. 2000)(found unpersuasive that federal income tax laws violate the Free Exercise Clause of the First Amendment); United States v. Mostler, 411 Fed.Appx. 521, 524 (3d Cir. 2011)("the defense that the tax statutes are unconstitutional... [has been] explicitly foreclosed by the Supreme Court."); Knoblauch v. C.I.R., 749 F.2d 200, 202 (5th Cir. 1984)(rejecting the notion that federal income tax is unconstitutional because the Sixteenth Amendment was never properly ratified); Porth v. Brodrick, 214 F.2d 925, 926 (10th Cir. 1954)(rejecting the argument that income tax constitutes involuntary servitude in violation of the Thirteenth Amendment). Moreover, the Supreme Court has long held that a defendant's views regarding the validity of the federal tax laws are not relevant on the issue of mens rea because a mere disagreement with the tax laws is no defense to the charged crime. Cheek v. United States, 298 U.S. 192, 206 (1991). Accordingly, Defendant is precluded from introducing any evidence relating to his broad assertions that federal tax laws are unconstitutional and/or that the Sixteenth Amendment is invalid. Next, the Government requests that the Court preclude Defendant from presenting any evidence of his alternative interpretations of the federal tax laws, to the extent that such evidence was not actually relied upon by him or such evidence would undermine the authority of this Court. While Defendant is generally permitted to introduce evidence to negate willfulness, at this time, it is difficult to determine from Defendant's response to the Government's in limine motion what, if any, evidence Defendant would produce in connection with alternative interpretations of the tax laws. Therefore, if Defendant decides to proffer evidence on this issue, the Court would first make a legal determination whether such evidence should be introduced.[3] With respect to the Government's final request on this motion, the Court will address Defendant's challenge to the jurisdiction of this Court later in this Opinion.

B. Motion to Admit 404(b) Evidence

The Government seeks to introduce, pursuant to Fed.R.Evid. 404(b), the following evidence:

• Defendant's tax filing history
• Defendant's mailing of additional fake ...

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