March 28, 1996
On November 9, 1995, a grand jury sitting in the Middle District of Pennsylvania returned an indictment charging defendant Neil H. Rhodes with offenses related to his failure to pay income and self-employment taxes and concealment of his income. On January 16, 1996, the jury returned a verdict of guilty with respect to each of the four counts of the indictment. Sentencing is scheduled for Monday, April 8, 1996. Rhodes is proceeding pro se.
Before the court are motions by Rhodes: for judgment of acquittal or, alternatively, for a new trial; to dismiss for failure to state an offense against the United States or for lack of subject matter jurisdiction; and for permission to file the motion for judgment of acquittal or new trial. Although Rhodes has not filed a brief in support of any of these motions, they will be addressed at this time because the legal authority on which Rhodes relies is set forth in the motions themselves. Also, the government already has filed a response to the motions.
I. MOTION FOR EXTENSION OF TIME
A motion for judgment of acquittal pursuant to Fed. R. Crim. P. 29, when made after the entry of a verdict, "may be made or renewed within 7 days after the jury is discharged or within such further time as the court may fix during the 7-day period." Rule 29(c). A motion for a new trial based on any ground other than newly discovered evidence "shall be made within 7 days after the verdict or finding of guilty or within such further time as the court may fix during the 7-day period." Fed. R. Crim. P. 33. The time period established by Rule 33 is jurisdictional in nature, and the district court has no authority to extend the time when no motion is filed within the 7-day period. United States v. Coleman, 811 F.2d 804, 807 (3d Cir. 1987) (citing, inter alia, United States v. Smith, 331 U.S. 469, 474-475, 91 L. Ed. 1610, 67 S. Ct. 1330 (1947)), cert. denied, 490 U.S. 1070 (1989).
In United States v. Giampa, 758 F.2d 928, 936 n.1 (3d Cir. 1985), the Third Circuit held that a judgment of acquittal may be made sua sponte by the district court under its inherent authority after the time period elapses. See also Coleman at 807; United States v. Wright-Barker, 784 F.2d 161, 170 n. 8 (3d Cir. 1986). We see no basis for such action here. First, any question as to the validity of our holdings may be raised by Rhodes on appeal to the Third Circuit. More important is the lack of merit in the argument proffered by Rhodes.
Rhodes argues, based on language taken out of context from Eisner v. Macomber, 252 U.S. 189, 207, 64 L. Ed. 521, 40 S. Ct. 189 (1920), to the effect that "income" under the Sixteenth Amendment is limited to profit proceeding from property. Actually, the Supreme Court held that income is "gain derived from capital, from labor, or from both combined, provided it be understood to include profit gained through a sale or conversion of capital assets,.. ." Id. at 207 (internal quotations, citation omitted). The discussion centered on gain from capital because the gain at issue was in the form of stock dividends. Id. at 208. Rhodes argues that the Supreme Court was clarifying what is "gain"; actually, it was clarifying what is "gain derived from capital." Gain from labor was not at issue, and Eisner is inapposite.
Rhodes' argument that he is not a "person" subject to the Internal Revenue Code will be discussed, and rejected, below.
In this case, the jury returned a verdict and was discharged on January 16, 1996. Any motions under Rule 29(c) and Rule 33 were due on or before January 25, 1996, excluding the intervening weekend from the 7-day period. Rhodes filed his motions on March 19, 1996, well after the prescribed period had elapsed. The court is without jurisdiction to extend the time for filing a Rule 33 motion, and no argument of merit supporting a motion for judgment of acquittal appears. Exercise of our inherent authority to enter a judgment of acquittal is unwarranted. Rhodes' motion for permission to file a motion for judgment of acquittal or for a new trial will be denied. Based on that ruling, Rhodes' motion for a judgment of acquittal or for a new trial will be denied.
II. MOTION TO DISMISS
Rhodes moves to dismiss the indictment under Fed. R. Crim. P. 12(b)(2), which permits the court to hear a motion to dismiss an indictment that fails to show jurisdiction in the court or to charge an offense at any time during the pendency of the proceedings.
In this instance, Rhodes was charged under 26 U.S.C. § 7201, which makes it a felony to willfully evade the payment of any tax imposed under Title 26 of the United States Code. As has previously been pointed out to Rhodes, crimes defined within the Internal Revenue Code, specifically Chapter 75 of Title 26 of the Internal Revenue Code, are offenses against the United States over which a federal district court has jurisdiction under 18 U.S.C. § 3231. Tax evasion is properly a subject for the exercise of federal power under Article I, § 8 and the Sixteenth Amendment to the Constitution of the United States. United States v. Isenhower, 754 F.2d 489, 490 (3d Cir. 1985). The authority of Congress to confer jurisdiction on federal courts is well-established. W.G. v. Senatore, 18 F.3d 60, 64 (2d Cir. 1994) (citing Marbury v. Madison, 5 U.S. (1 Cranch) 137, 173-180, 2 L. Ed. 60 (1803); Bender v. Williamsport Area School District, 475 U.S. 534, 541, 89 L. Ed. 2d 501, 106 S. Ct. 1326 (1986)).
Rhodes makes two arguments in his motion to dismiss the indictment. The first is that the income he received from his business was not taxable income under Title 26. Second, he argues that he is not a "person" subject to taxation.
The latter argument is easily addressed. An individual is a person under the Internal Revenue Code. United States v. Sloan, 939 F.2d 499, 500-501 (7th Cir. 1991), cert. denied, 502 U.S. 1060, 117 L. Ed. 2d 110, 112 S. Ct. 940, reh'g denied, 503 U.S. 953, 117 L. Ed. 2d 654, 112 S. Ct. 1518 (1992). See also 26 U.S.C. § 1 (imposing an individual income tax). The remainder of Rhodes' argument in this respect relates to his duty to take action under the Internal Revenue Code, and will be discussed below.
B. Sufficiency of the Indictment
Rhodes' argument regarding taxable income goes to the sufficiency of the indictment.
An indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs the defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense.
United States v. Bailey, 444 U.S. 394, 414, 62 L. Ed. 2d 575, 100 S. Ct. 624 (1980) (citation, quotation marks omitted). See also United States v. Scanzello, 832 F.2d 18, 22 (3d Cir. 1987) (applying same standard).
The elements of the offense charged, i.e. tax evasion under § 7201, are:
... willfulness; the existence of a tax deficiency...; and an affirmative act constituting an evasion or attempted evasion of the tax... .