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United States v. Beam

United States District Court, M.D. Pennsylvania

May 15, 2015

UNITED STATES OF AMERICA
v.
TROY A. BEAM, Defendant.

MEMORANDUM

CHRISTOPHER C. CONNER, District Judge.

Presently before the court is convicted defendant Troy A. Beam's ("Beam") motion (Doc. 324) for a new trial pursuant to Federal Rule of Criminal Procedure 33, alleging that the government committed discovery violations under Brady, Giglio, Jencks, [1] and Federal Rule of Criminal Procedure 16. Beam requests that the court issue a subpoena for undisclosed IRS criminal investigation files; hold an evidentiary hearing to determine the extent of the alleged discovery violations; and dismiss all indictment counts with prejudice or, alternatively, vacate the judgment against Beam and grant a new trial. For the reasons that follow, the court will deny the motion in its entirety.

I. FACTUAL BACKGROUND & PROCEDURAL HISTORY

On February 18, 2010, an indictment (Doc. 1) was filed charging Beam with one count of corruptly endeavoring to obstruct and impede the tax laws of the Internal Revenue Service, in violation of 26 U.S.C. § 7212(a); one count of attempting to evade the payment of assessed taxes, for tax years 1992 through 1998, in violation of 26 U.S.C. § 7201; and four counts of willfully failing to file income tax returns, for tax years 2003 through 2006, in violation of 26 U.S.C. § 7302. Beam's trial commenced with jury selection on April 4, 2011 and trial proceedings spanned approximately fourteen days. (See Docs. 167, 240-52).

In general terms, the government's evidence demonstrated that Beam earned significant income through his work as a home builder and as the landlord of various rental properties in and around Shippensburg, Pennsylvania. Despite this income, Beam had not filed a tax return since 1996 and had not paid income taxes on any earned income since 1992. The government established that Beam used various trust entities to receive income while retaining actual control over the trust assets. The government also showed that Beam engaged in a variety of evasive actions to hinder the IRS's tax collection efforts, such as concealing his assets, accusing IRS employees of misconduct, and directing third parties to refrain from cooperating with the IRS. On May 4, 2011, the jury found Beam guilty on all counts charged in the indictment. (Doc. 225). On April 12, 2012, the court sentenced Beam to seventy-four months of imprisonment. (Doc. 302).

Beam's case was one of multiple prosecutions that developed out of the IRS's investigation of Commonwealth Trust Company ("CTC"), an entity which marketed and sold sham trusts to individuals seeking to avoid federal tax obligations. (Doc. 327 at 7-8; Doc. 335 at 9-10). Following Beam's conviction, defendants in a factually similar case before our sister court in the Eastern District of Pennsylvania, United States v. Bitterman, No. 5:2009-CR-772 (E.D. Pa.), discovered much of the evidence at issue in the matter sub judice. Like Beam, the defendants in Bitterman were CTC clients convicted of criminal tax evasion. (Doc. 327 at 8-9). Both Beam and the Bitterman defendants have claimed that approximately seventy boxes of CTC marketing materials located in the IRS's Philadelphia office were improperly omitted from the government's discovery production. (Id. at 8).[2] These boxes contain "marketing brochures, trust manuals, and other written materials, " as well as audio recordings from CTC seminars. (Id.) Defense counsel in Bitterman catalogued the marketing materials and noted why the government was allegedly obligated to produce each document during discovery. (Id.) Beam provides this catalogue with his motion and incorporates its contents by reference. ( Id., Ex. A, nos. 1-375).

On June 19, 2012, the government produced an additional set of previously undisclosed IRS investigative records in response to the Bitterman defendants' motion for a new trial. (Id. at 11). According to Beam, "the government has never explained where these materials came from, why they were apparently kept secretly from the main IRS investigation files, or why they were first disclosed... in 2012." (Id. at 12). Beam asserts that this post-trial production includes evidence that impeaches the trial testimony given by government witness and former CTC principal Wayne Rebuck ("Rebuck"), (id. at 10-18), and provides this new evidence in tandem with the instant motion. ( Id., Ex. B; Doc. 329).

Beam filed a Freedom of Information Act ("FOIA") request with the IRS on October 13, 2013. 5 U.S.C. § 552; (see Doc. 327 at 18). Therein, Beam sought "all criminal investigation documents, records, and files personally identifiable to him." (Doc. 327 at 18). After requiring additional time to provide a response, the IRS answered on March 31, 2014, reporting that it had uncovered a total of 41 boxes and 281 pages of documents responsive to Beam's inquiry. (Id. at 19). The IRS then produced 15 pages to Beam and claimed FOIA exemptions for the withheld records. (Id.) Specifically, the IRS invoked grand jury exemptions pursuant to Federal Rule of Criminal Procedure 6(e) and Internal Revenue Code § 6103(e)(7) with respect to the 41 undisclosed boxes of responsive material. I.R.C. § 6103(e)(7); FED. R. CRIM. P. 6(e); (see Doc. 327 at 19). On August 29, 2014, Beam initiated civil proceedings in federal district court against the IRS, seeking access to the 41 boxes and 266 pages of undisclosed documents. See Beam v. IRS, No. 3:14-CV-1706 (M.D. Pa. Aug. 29, 2014) (Doc. 1).

On May 5, 2014, Beam filed the instant motion (Doc. 324) for a new trial, alleging that the proceedings were "irreparably infected with massive discovery violations that rendered the trial dramatically unfair." (Doc. 327 at 5). Beam first asserts that the discrepancy between the 20 boxes provided by the IRS during pre-trial discovery and the 41 boxes of grand jury material responsive to Beam's FOIA request evidences a discovery violation. (Doc. 324 at 2; Doc. 327 at 20-21). The government responds that the FOIA exemptions are valid and that the box discrepancy is attributable to the IRS repackaging and reorganizing its case files following Beam's trial. (Doc. 335 at 48).

Beam further avers that "the prosecution had a duty under [Federal Rule of Criminal Procedure] 16, Brady, and Giglio to disclose all of the CTC [marketing] information, documents, and materials obtained during the course of the government's investigation of CTC and it's [sic] principals, including... seventy boxes of materials kept at the IRS office in Philadelphia, upon which Beam could have predicated a more robust and believable reliance defense." (Doc. 327 at 8-9). Additionally, Beam alleges that the prosecution failed to disclose significant interviews, memoranda, and information pertaining to its key witness, Rebuck, "depriv[ing] Beam of a fair opportunity... to interrogate... [Rebuck] about the whys, whens, and wherefores of his cooperation with the government and confidential informant work." (Id. at 18). The government replies that the CTC marketing materials do not qualify as newly discovered evidence because Beam's trial counsel was aware of their existence, (Doc. 335 at 26-30), and that any and all undisclosed documents are cumulative of other evidence and immaterial to Beam's guilt or punishment. (Doc. 335 at 26-47). The motion is fully briefed and ripe for disposition.

II. LEGAL STANDARD

Under Brady v. Maryland, the government must disclose to a criminal defendant any evidence in its possession that is favorable to the defendant and material to guilt or punishment. 373 U.S. 83, 87 (1963). Both impeachment and exculpatory evidence fall within the government's disclosure duty. See Giglio v. United States, 405 U.S. 150, 154 (1972); see also FED. R. CRIM. P. 16(a)(1)(E) ("Upon a defendant's request, the government must permit the defendant to inspect and to copy or photograph books, papers, [or] documents [that are]... within the government's possession, custody, or control and... material to preparing the defense."). The Jencks Act further requires the government to produce, upon the defendant's request, any statement of a testifying government witness which is relevant to the subject matter of their testimony. 18 U.S.C. § 3500.

A Brady violation occurs when "(1) evidence was suppressed; (2) the evidence was favorable to the defense; and (3) the evidence was material to guilt or punishment." United States v. Risha, 445 F.3d 298, 303 (3d Cir. 2006) (citing United States v. Pelullo, 399 F.3d 197, 209 (3d Cir. 2005)). The materiality prong of the Brady analysis is satisfied if "nondisclosure [is] so serious that there is a reasonable probability that [the introduction of the suppressed evidence at trial] would have produced a different verdict." Strickler v. Greene, 527 U.S. 263, 281 (1999). Such a reasonable probability exists when the fact of the evidentiary suppression is "sufficient to undermine confidence in the outcome" at trial. United States v. Bagley, 473 U.S. 667, 682 (1985); see Kyles v. Whitley, 514 U.S. 419, 434 (1995). In contrast, the mere possibility of a more favorable result for the defendant is insufficient to establish materiality. See Strickler, 527 U.S. at 291; United States v. Agurs, 427 U.S. 97, 109-110 (1976), abrogated on other grounds by Bagley, 473 U.S. 667. When undertaking this inquiry, the court must consider the suppressed evidence both individually and in the aggregate. See Kyles, 514 U.S. at 446 n.10; Johnson v. Folino, 705 F.3d 117, 129 (3d Cir. 2013).

Suppression of material evidence violates a defendant's due process rights, the standard remedy for which is a new trial. Brady, 373 U.S. at 87; see Gov't of V.I. v. Fahie, 419 F.3d 249, 253 (3d Cir. 2005). Dismissal is only warranted if the defendant demonstrates willful and deliberate misconduct on the part of the government. See Fahie, 419 F.3d at 254-55.

III. DISCUSSION

Beam seeks a subpoena demanding the production of undisclosed IRS criminal investigation files associated with his case; an evidentiary hearing to determine the extent of the alleged discovery violations; and the dismissal of all indictment counts with prejudice, or, alternatively, a new trial. The court will address these requests seriatim.

A. Subpoena for IRS Criminal Investigation Files

Beam asserts that "the IRS... is in possession of over [41] boxes of documents from the criminal investigation file it developed and maintained on... Beam - over twice the number of boxes disclosed to the Beam trial defense team - but is refusing to disclose all but approximately ten pages of documents, citing to purported grand jury secrecy and law enforcement investigation concerns." (Doc. 324 at 2). Beam submits that "although the FOIA certainly does contain various disclosure exemptions, the exemptions cited by the IRS must assuredly give way... to Beam's fundamental Fifth and Sixth Amendment rights." (Id.)

The government replies that Beam's assertions are no more than "pure speculation." (Doc. 335 at 49). The government also files an affidavit from IRS Special Agent Mary Beccone ("Beccone"), wherein Beccone avers that at the conclusion of Beam's trial, she consolidated and repackaged all evidence and exhibits into IRS archive boxes, which are "smaller than [the] bankers boxes and paper boxes... used prior to and during trial." (Doc. 342, Ex. 2). Upon receipt of Beam's October 2013 FOIA request, Beccone reviewed the contents of the boxes before delivering them to the IRS Disclosure Office in Philadelphia. (Id.) She attests that, during her review, she did not find "any evidence that had not been turned over to... Beam's defense team." (Id.)

Under Federal Rule of Criminal Procedure 6(e)(2), participants in grand jury proceedings are prohibited from revealing information regarding any "matter occurring before the grand jury." FED. R. CRIM. P. 6(e)(2). Courts have held that Rule 6(e) exempts all grand jury materials from FOIA disclosure. 5 U.S.C. § 552(b)(3) ("[FOIA] does not apply to matters that are... specifically exempted from disclosure by statute."); see, e.g., Manchester v. Drug Enforcement Admin., 823 F.Supp. 1259, 1267-68 (E.D. Pa. 1993), aff'd, 40 F.3d 1240 (3d Cir. 1994); Harvey v. Dep't of Justice, 747 F.Supp. 29, 38-39 (D.D.C. 1990). In the matter before the court, Beam proffers no evidence to counter the IRS's representation that the 41 undisclosed boxes constitute grand jury materials and that the 266 undisclosed pages are also protected. Rather, Beam claims hastily that a subpoena is necessary to "determine the... extent of discovery violations in this case, " (Doc. 341 at 14), because "the assertion of grand jury secrecy just does not make any sense." (Doc. 327 at 19). The court observes that Beam's submissions are utterly bereft of citation to legal authority. Similarly, Beam offers no factual basis for his averments. In sum, Beam's ipse dixit assertions miss the mark entirely.

Subsequent to filing the instant motion, Beam initiated an action in district court seeking judicial review of the IRS's partial response to his FOIA request. Beam v. IRS, No. 3:14-CV-1706 (M.D. Pa.). In so doing, Beam employs a more appropriate vehicle for pursuing agency records withheld under FOIA. See 5 U.S.C. § 552(a)(4)(B) ("On complaint, ... the district court of the United States... has jurisdiction to enjoin... agenc[ies] from withholding agency records."); Lame v. Dep't of Justice, 654 F.2d 917, 921 (3d Cir. 1981) ("[FOIA] places the burden of establishing ...


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