Pete Hendrickson Trial -- An Important Note

[SteveSy]

He will not be permitted to present his interpretation to the jury since it is contrary to the law

He has to be able to present his (ahem) interpretation to the jury. He just won't be able to argue that it's the law.

I can tell you now he won't be able to present his interpretation of the law along with the law itself. An interpretation of something is meaningless if you can't show the thing that interpretation is based on. Certainly it will be almost impossible to convince someone else you believe your interpretation is valid over an authoritative figure if the authoritative figure just gets to say "My interpretation is valid and his isn't" and you can't even show what you were interpreting.

[Demosthenes]

Stevie, if he wants to use the Cheek defense, he has to admit he was wrong in his earlier beliefs. If he admits he was wrong, he can show how he reached his erroneous conclusion.

The time to validity of his legal theories is prior to trial.

[SteveSy]

Stevie, if he wants to use the Cheek defense, he has to admit he was wrong in his earlier beliefs. If he admits he was wrong, he can show how he reached his erroneous conclusion.

The time to validity of his legal theories is prior to trial.

Why does he have to admit he's wrong? Where does it say that in the Cheek case? He's not trying to prove he's right just that he personally believes it and why.

[Famspear]

Why does he have to admit he's wrong? Where does it say that in the Cheek case? He's not trying to prove he's right just that he personally believes it and why.

It would be helpful to his defense if he were to acknowledge that he was wrong. Under the Cheek case, the Court never stated that a mere personal belief that you are right is a sufficient defense, at least not as a matter of law.

The test is whether the defendant violated a known legal duty - a duty of which he was aware. A mere actual belief that one is not violating the law is not sufficient. Under Cheek, at least the way I read the text:

1. the actual belief must be based on a MISUNDERSTANDING

2. the misunderstanding must itself must relate to the COMPLEXITY of the law

3. the complexity must involve the tax law -- not merely the Constitution.

4. the complexity must have CAUSED the misunderstanding.

If Pete tries to introduced lots of evidence about "the law", that could actually backfire on him if the Court were to allow its admission. The jury could conclude that, based on Pete's extensive writing, his "actual belief," while actually "actual" (so to speak), is NOT an "actual good faith belief based on a misunderstanding caused by the complexity of the tax law" -- which is, I believe, the specific formulation in Cheek. Indeed the fact that Pete has "studied" the law and has written so extensively about his own interpretation of it could be viewed by the jury as "a studied conclusion" (to use the Supreme Court's words) about the law, not as a good faith misunderstanding caused by the complexity of the law.

Tax protesters who read Cheek tend to focus on the phrase "actual belief" and ignore the rest of the formulation of the doctrine.

Hendrickson is obviously AWARE of what the real law is; he just refuses to accept that the real law really is the law. He believes that his interpretation is the "real law." And that kind of belief, even if an actual belief, is not an "actual belief based on a misunderstanding caused by the complexity of the tax law." Instead, that actual belief is really a DISAGREEMENT with the law -- an attempt to substitute his own BELIEF about what the law SHOULD be.

[SteveSy]

The test is whether the defendant violated a known legal duty - a duty of which he was aware. A mere actual belief that one is not violating the law is not sufficient. Under Cheek, at least the way I read the text:

1. the actual belief must be based on a MISUNDERSTANDING

2. the misunderstanding must itself must relate to the COMPLEXITY of the law

3. the complexity must involve the tax law -- not merely the Constitution.

4. the complexity must have CAUSED the misunderstanding.

If Pete tries to introduced lots of evidence about "the law", that could actually backfire on him if the Court were to allow its admission. The jury could conclude that, based on Pete's extensive writing, his "actual belief," while actually "actual" (so to speak), is NOT an "actual good faith belief based on a misunderstanding caused by the complexity of the tax law" -- which is, I believe, the specific formulation in Cheek. Indeed the fact that Pete has "studied" the law and has written so extensively about his own interpretation of it could be viewed by the jury as "a studied conclusion" (to use the Supreme Court's words) about the law, not as a good faith misunderstanding caused by the complexity of the law.

From my understanding its simply that you can not argue the laws, constitutional or otherwise, are invalid. A studied conclusion would be a misunderstanding if that conclusion leads you to believe something contrary to what the law is. How could it be anything else? From your reasoning a tax firm, reaching a studied conclusion, could be found to have willfully violated the law if the court or IRS ever disagrees with them regardless if this is their first time or not.

Tax protesters who read Cheek tend to focus on the phrase "actual belief" and ignore the rest of the formulation of the doctrine.

The formulation is simple IMO. No arguing the laws are invalid and you get to attempt to show the jury that you did everything appropriately according to your belief.

Hendrickson is obviously AWARE of what the real law is; he just refuses to accept that the real law really is the law. He believes that his interpretation is the "real law." And that kind of belief, even if an actual belief, is not an "actual belief based on a misunderstanding caused by the complexity of the tax law." Instead, that actual belief is really a DISAGREEMENT with the law -- an attempt to substitute his own BELIEF about what the law SHOULD be.

I'm sorry but that doesn't even make sense. You can't on the one hand admit he believes the law means what he thinks and then on the other claim he can't possibly believe its the law. That's totally nonsensical on your part. If he were arguing what the law should be then you're right, he can't do that, but he's arguing the law means something based on what he's read in the written law created by congress, the only entity capable of constitutionally creating laws. You are equating court opinion and IRS opinion with law itself. The constitution is very clear on this, only congress gets to make laws. You can use the term "case law" all you like but in reality laws originate and end with congress, end of story. So to claim he was shown the law, meaning court or IRS opinion, and therefore is bared from claiming the actual law means otherwise to him is bogus. The actual law is what is written, anything derived from that is just opinion, even though that opinion maybe the currently accepted interpretation.

It doesn't matter really, he won't get to show the law and how its possible he could have believed otherwise. He'll have no defense because his primary evidence will be denied. The jury will be left with the impression that there's no way he could have possibly believed what he's saying from the start because the court will provide the jury a reworded version of the written law. You know and I both know he's toast before he even starts.

[Famspear]

From my understanding its simply that you can not argue the laws, constitutional or otherwise, are invalid.

No, it's not simply just that. Re-read the Cheek case.

A studied conclusion would be a misunderstanding if that conclusion leads you to believe something contrary to what the law is. How could it be anything else?

No, under the Cheek doctrine, a "studied conclusion" is not an "actual good faith belief based on a misunderstanding caused by the complexity of the tax law". The Supreme Court more or less indicated that a "studied conclusion" is the very thing that Congress did NOT intend to be protected by the willfulness requirement. There is a difference between an honest misunderstanding caused by the complexity of the law and a studied conclusion based on EXTENSIVE STUDY OF THE LAW -- with a straining attempt (and believe me, Peter Hendrickson and his followers are straining) to come up with your own conclusion -- when you are AWARE that the IRS disagrees with you. If you are AWARE of the IRS interpretation of the law, then you are aware of what the law is. No, not because the IRS "says so," but because the IRS just happens to be right. In this situation, as the Court stated in Cheek, you MUST TAKE THE RISK OF BEING WRONG.

From your reasoning a tax firm, reaching a studied conclusion, could be found to have willfully violated the law if the court or IRS ever disagrees with them regardless if this is their first time or not.

That makes absolutely no sense.

The formulation is simple IMO. No arguing the laws are invalid and you get to attempt to show the jury that you did everything appropriately according to your belief.

That's your formulation. That's not exactly what the Cheek doctrine says.

You can't on the one hand admit he believes the law means what he thinks and then on the other claim he can't possibly believe its the law. That's totally nonsensical on your part.

No it's not nonsensical on my part -- because it's not what I said.

. . . . he's arguing the law means something based on what he's read in the written law created by congress, the only entity capable of constitutionally creating laws. You are equating court opinion and IRS opinion with law itself. The constitution is very clear on this, only congress gets to make laws. You can use the term "case law" all you like but in reality laws originate and end with congress, end of story.

Wrong. Totally incorrect. We've been through this over and over, Steve.

So to claim he was shown the law, meaning court or IRS opinion, and therefore is bared [sic] from claiming the actual law means otherwise to him is bogus. The actual law is what is written, anything derived from that is just opinion, even though that opinion maybe the currently accepted interpretation.

Wrong. Completely wrong.

[SteveSy]

From my understanding its simply that you can not argue the laws, constitutional or otherwise, are invalid.

No, it's not simply just that. Re-read the Cheek case.

Read the oral argument, it should clear things up.
http://www.oyez.org/cases/1990-1999/199 ... /argument/

It doesn't matter what the IRS or courts have told him. He can still argue he had a good faith belief he followed the law and present all evidence proving such. Cheek lost a previous case for not filing, he knew about other cases showing he was wrong. The court still reversed the 7th.

[Dr. Caligari]

It doesn't matter what the IRS or courts have told him. He can still argue he had a good faith belief he followed the law and present all evidence proving such.

I'm with Steve here (with the exception of the word "all"-- Rule 403 still applies). But the fact that the IRS and the courts told him he was wrong certainly comes in as evidence that he didn't really believe what he says he believed.

[Demosthenes]

It doesn't matter what the IRS or courts have told him. He can still argue he had a good faith belief he followed the law and present all evidence proving such.

I'm with Steve here (with the exception of the word "all"-- Rule 403 still applies). But the fact that the IRS and the courts told him he was wrong certainly comes in as evidence that he didn't really believe what he says he believed.

Wes. Can a defendant argue good faith unless he admits he's wrong?

[SteveSy]

It doesn't matter what the IRS or courts have told him. He can still argue he had a good faith belief he followed the law and present all evidence proving such.

I'm with Steve here (with the exception of the word "all"-- Rule 403 still applies). But the fact that the IRS and the courts told him he was wrong certainly comes in as evidence that he didn't really believe what he says he believed.

I totally agree, the government is free to show everything that said he was wrong which Pete was made aware of or discovered while doing his "research". Regardless, its a matter for the jury to decide whether Pete is full of crap or not, not by the judge by excluding evidence clearly relevant to his belief.

[Paul]

I don't think he has to, but I believe it helps with the jury. And this particular idiot will be allowed to argue why he believed the law meant that he didn't have to file or pay or whatever, as long as he doesn't cross the line and try to argue the law to the jury. Larry Becraft is very good at walking this line, and it's the key to his few, but highly-publicized successes.

[SteveSy]

I don't think he has to, but I believe it helps with the jury. And this particular idiot will be allowed to argue why he believed the law meant that he didn't have to file or pay or whatever, as long as he doesn't cross the line and try to argue the law to the jury. Larry Becraft is very good at walking this line, and it's the key to his few, but highly-publicized successes.

Seriously, if its as obvious as you all claim it is he's certainly going to lose anyway. The jury will see he's full of crap and convict. It will make it clear to all who subscribe to Pete's theories that no average person will believe his nonsense, so don't even try.

You have to remember people like Pete believe its the IRS and the courts who are running a sham and average people will not fall for it. Once it has been shown average people don't reason like that a lot of TP's will be hesitant to even attempt to argue in court. You want to place me in the group then so be it. But I suspect the government won't have so many slam dunks if people like him are allowed to support their position and will be forced to reword the law if they want to continue their winning streak.

[Nikki]

Fine.

Let's allow Pete to argue the law before the jury.

Pete's going to have to prove that his understanding of the law devolves from two things:

1 - The definition of "includes" as specifically stated in 26USC doesn't mean what it says.

2 - The sections of 26USC dealing with collection of withholding payments at the source override the plain text of "compensation for personal services" and somehow remove wages from taxable income.

He's going to have to, to support a Cheek defense, convince a jury that he was so incredibly stupid as to misunderstand a clearly-stated definition AND to misunderstand a clearly-stated definition ot one of the components of income.

He's also going to have to convince the jury that his involvement in sending a mail bomb was somehow related to his misunderstanding of the tax laws AND that his compliance with the law for several years was a mistake on his part.

Pete, barring a totally confused, ignorant jury, is toast. He, and his wife, will spend time in prison AND will, subsequent to that, have to pay off the civil case losses regarding taxes, penalties, and interest.

[Famspear]

Read the oral argument, it should clear things up.
http://www.oyez.org/cases/1990-1999/199 ... /argument/

It doesn't matter what the IRS or courts have told him. He can still argue he had a good faith belief he followed the law and present all evidence proving such. Cheek lost a previous case for not filing, he knew about other cases showing he was wrong. The court still reversed the 7th.

I don't need to have anything "cleared up" for me. And oral argument is nice, but I'm talking about what the Court ultimately stated in Cheek, not what the parties argued prior to the decision.

Yes, a defendant can "still argue" that he had a good faith belief, etc. What I am telling you is that under the Cheek doctrine, a jury might take evidence of an extensive study of the law by the defendant, and a "studied conclusion" by the defendant, etc., as being probative of lack of a good faith belief, etc., etc. -- or the jury might not. Sometimes a Cheek defense works (as it did for Tommy Cryer) and sometimes it does not (as in the case of John Cheek himself).

And I agree with you, as modified by what Caligari said regarding the word "all." The defendant is still subject to the possibility of an adverse ruling on a 403 objection if the defendant tries to throw in too much.

Under Cheek, the statement that it "doesn't matter what the IRS or courts have told" a defendant is incorrect. What the IRS and the courts have "told" the defendant (i.e., the stuff the defendant has read, in terms of court decisions, IRS pronouncements, etc.), might be considered probative of the defendant's awareness of the existence of his legal obligation. Remember what the Supreme Court has stated in Cheek and other cases: willfulness connotes the "voluntary, intentional violation of a KNOWN legal duty." If the defendant KNOWS of the duty (i.e., if the defendant is AWARE of the legal duty), then his knowledge is problematical for him.

I argue that the defendant's mere belief that this legal duty is not a legal duty does not, in and of itself, negate the fact that he is AWARE of the duty. The belief that negates willfulness under the Cheek doctrine is not merely an "actual belief," no matter how strongly held. I argue that the only actual belief that negates willfulness is an actual GOOD faith belief that is based on a misunderstanding that is CAUSED by the complexity of the tax law.

Remember what the Court said in Cheek:

But carrying this burden requires negating a defendant's claim of ignorance of the law or a claim that, because of a misunderstanding of the law, he had a good-faith belief that he was not violating any of the provisions of the tax laws. This is so because one cannot be aware that the law imposes a duty upon him and yet be ignorant of it, misunderstand the law, or believe that the duty does not exist.

The Court in Cheek also stated:

Of course, in deciding whether to credit Cheek's good-faith belief claim, the jury would be free to consider any admissible evidence from any source showing that Cheek was aware of his duty to file a return and to treat wages as income, including evidence showing his awareness of the relevant provisions of the Code or regulations, of court decisions rejecting his interpretation of the tax law, of authoritative rulings of the Internal Revenue Service, or of any contents of the personal income tax return forms and accompanying instructions that made it plain that wages should be returned as income [ . . . ]

And under Cheek, it's up to the trier of fact to make that "willfulness" determination (in a jury trial, that's the jury).

[notorial dissent]

And, ultimately we come back around to the wording from Cheek upon which you want to hang your theory, and which ultimately hangs him...

Of course, in deciding whether to credit Cheek's good-faith belief claim, the jury would be free to consider any admissible evidence from any source showing that Cheek was aware of his duty to file a return and to treat wages as income, including evidence showing his awareness of the relevant provisions of the Code or regulations, of court decisions rejecting his interpretation of the tax law, of authoritative rulings of the Internal Revenue Service, or of any contents of the personal income tax return forms and accompanying instructions that made it plain that wages should be returned as income [ . . . ]

And I’ll repeat those for you Stevie: showing that Cheek was aware...of court decisions rejecting his interpretation of the tax law, of authoritative rulings of the Internal Revenue Service...

There is quite simply no way with the volume of material out there, not to mention the mounting losses of his followers and the rulings on their losses-which they have discussed in great and boring length and detail(with the end conclusion being that either the losers didn't do it right or that the courts were all corrupt-St Pete couldn't possibly be wrong), and particularly in light of his claim to be a tax researcher that this cannot apply. There is no way he could not have known what the law was, and what the interpretation was, and so has no valid defense to ignorance, stupidity and ego he can always claim, but they are not going to do him any good. He had to have known what the law was, and whether or not he believed it is under the above conditions irrelevant. If he believed the law was wrong the forum to debate it was in court seeking to have the law overturned, not by not paying his taxes and then claiming he didn’t know he had to.

[Famspear]

Steve, now review the following from the text of Cheek:

Claims that some of the provisions of the tax code are unconstitutional are submissions of a different order. [citation omitted] They do not arise from innocent mistakes caused by the complexity of the Internal Revenue Code. Rather, they reveal full knowledge of the provisions at issue and a studied conclusion, however wrong, that those provisions are invalid and unenforceable. Thus, in this case, Cheek paid his taxes for years, but after attending various seminars and based on his own study, he concluded that the income tax laws could not constitutionally require him to pay a tax.

We do not believe that Congress contemplated that such a taxpayer, without risking criminal prosecution, could ignore the duties imposed upon him by the Internal Revenue Code and refuse to utilize the mechanisms provided by Congress to present his claims of invalidity to the courts and to abide by their decisions. There is no doubt that Cheek, from year to year, was free to pay the tax that the law purported to require, file for a refund and, if denied, present his claims of invalidity, constitutional or otherwise, to the courts. See 26 U.S.C. 7422. Also, without paying the tax, he could have challenged claims of tax deficiencies in the Tax Court, 6213, with the right to appeal to a higher court if unsuccessful. 7482(a)(1). Cheek took neither course in some years, and, when he did, was unwilling to accept the outcome. As we see it, he is in no position to claim that his good-faith belief about the validity of the Internal Revenue Code negates willfulness or provides a defense to criminal prosecution under 7201 and 7203. Of course, Cheek was free in this very case to present his claims of invalidity and have them adjudicated, but, like defendants in criminal cases in other contexts who "willfully" refuse to comply with the duties placed upon them by the law, he must take the risk of being wrong.

I argue that the same logic can apply where the defendant makes a statutory argument, rather than a constitutional one. A taxpayer who believes that the terms "employer" and "employee" and "wages" have specialized Cracking the Code meanings is not free, under the law, to read the contrary court decisions and IRS pronouncements and IRS instruction books and then reject them -- no matter how strongly he believes the courts and the IRS to be "wrong" -- and to simply file his tax return under the Cracking the Code method, and then argue that the complexity of the law "caused" him to have a "misunderstanding". Clearly, the defendant in such a case is aware of the law. To knowingly, intentionally reject the IRS interpretation is the equivalent of awareness of the law itself -- not because the IRS says so, but because the IRS just happens to be right. To reject the IRS interpretation where, as a matter of law, the IRS just happens to be right, is a DISAGREEMENT with the law, not a good faith belief, etc., etc., as that term is used by the Court in Cheek. Sometimes, an actual belief is not a Cheek good faith belief.

Stated in a slightly different way: The defendant's rejection of the IRS's interpretation of the law (which just happens to be the correct interpretation) is, essentially, an indirect but functional admission of the defendant's awareness of the law -- and it is this awareness that negates willfulness under the Cheek doctrine. Again, it is up to the jury (assuming we have a jury trial) to make that determination.

[wserra]

Wes. Can a defendant argue good faith unless he admits he's wrong?

The dilemma you see is more a practical one than a legal one. Legally, I think the answer is "Yes, he can". There is nothing I read in Cheek or later cases that requires a defendant to admit error in his profferred good faith belief. As I read the law, a defendant can sit on the stand and still insist s/he is right. Of course, the judge will then tell the jury what the law really is, and it might well be a more effective tack for a defendant to agree.

We are all familiar with the language from Cheek itself. Here is the Fifth Circuit's take on the issue in another case with which we have some familiarity, United States v. Simkanin, 420 F.3d 397 (5th Cir 2005).

The defendant in a criminal tax trial, unlike most other defendants, must be permitted to present evidence to show what he purportedly believed the law to be at the time of his allegedly criminal conduct. At the same time, however, the district court must be permitted to prevent the defendant's alleged view of the law from confusing the jury as to the actual state of the law, especially when the defendant has constructed an elaborate, but incorrect, view of the law based on a misinterpretation of numerous IRC provisions taken out of proper context. See, e.g., United States v. Barnett, 945 F.2d 1296, 1300 (5th Cir.1991) (stating that "[t]he jury must know the law as it actually is respecting a taxpayer's duty to file before it can determine the guilt or innocence of the accused for failing to file as required"). The district court in this case, like other courts in similar cases, struggled to balance these two competing concerns when it answered the jury's confusion as to the correct interpretation of the law, which unsurprisingly resulted from Simkanin's testimony about his own erroneous beliefs about the law. Thus, it is with this set of circumstances in mind that we consider Simkanin's arguments on appeal.

As I read it, this discussion actually posits that a defendant (like Simkanin), far from admitting the error, will insist that he is right. Then the trial judge must walk the tightrope of explaining to the jury what the law really is, while also making it clear that if they have a reasonable doubt about whether he actually believes in good faith all that hooey, they must acquit.

In fact, the jury sent a note indicating their confusion, because Simkanin testified that he believed he was not an "employer" with "employees", and the jury wondered if he might be right. The note only arose because Simkanin did not admit that he "misunderstood". Nonetheless, no one questioned that he had a potential Cheek defense which the jury had to decide.

[Joey Smith]

A defendant can argue good faith without admitting he is wrong.

What the defendant cannot do is to argue law to the jury. The defendant cannot say, "The law is X" -- that is and has always been the exclusive province of the judge throughout centuries of Anglo-American jurisprudence and as was the practice in the days of the Founders.

The defendant can say "In good faith, I believed that the law was X." The prosecutor can then rebut this by showing that the defendant had knowledge at some point that the law was not X, no matter how hard the defendant wanted to believe it.

This is one of the reasons that the DOJ goes after the civil injunction first, since after that the promoter cannot believably claim that he or she didn't know that their position was wrong.

This is all sort of academic in Pete's case, since he had notice early and often that his interpretation of tax law was just totally off-base, just as it was with Larken Rose, Irwin Schiff, Lynne Meredith, etc., etc., etc. before him.

To the best of my knowledge, the Cheek defense has never been successful with a promoter such as Pete. Once in a blue moon, some moonbat TP will convince a jury that they weren't aware or they were taken in by somebody, but the juries haven't shown the slightest inclination to believe any of the promoters yet, and the waiting for the verdicts in those cases has been measured in minutes and not hours.

Pete is going down very hard. Because of the amounts involved and his prior conviction, he will not be seeing the outside of a prison yard anytime soon.

[Paul]

Didn't understand a word I said, did you, stevesy?

[Famspear]

Seriously, if its as obvious as you all claim it is he's certainly going to lose anyway. The jury will see he's full of crap and convict. It will make it clear to all who subscribe to Pete's theories that no average person will believe his nonsense, so don't even try.

I just put in my prediction on the poll. I predict conviction. However, I don't believe that conviction is anything close to a certainty.

Steve wrote:

But I suspect the government won't have so many slam dunks if people like him are allowed to support their position and will be forced to reword the law if they want to continue their winning streak.

A defendant can properly support his position that his action (or his failure to act) was not willful without being allowed an improper end-run around the judge for the purpose of confusing the jury or trying to convince the jury that the judge's instructions on the law are wrong. But I think know what you are saying, and I agree in a sense. Congress could simply change the statute to provide a more clearly defined standard for willfulness, more clearly defined definitions of wages, employer, etc.

I wasn't there for the Tommy Cryer trial, but my understanding is that the Court did limit Cryer's ability to argue the law. I don't know how strictly that limitation was imposed. Since the jury let Cryer off, it would seem that even with limits on the defendant's efforts to argue the law to the jury, conviction is not a sure thing.

That's why I would not be shocked if Hendrickson were acquitted (even though I'm predicting that it's more likely than not that he will be convicted). Regardless of his incorrect arguments about the law, he is in my opinion an intelligent person, and he might be persuasive for one or two jurors (whatever) if put on the witness stand.

Which brings up a question for Steve and all other Quatloosians: If you were Hendrickson's lawyer, would you recommend that he testify? (Apologies if this has already been discussed somewhere.)