The opinion of the court was delivered by: Haight, District Judge:
MEMORANDUM OPINION AND ORDER
Trial in this tax evasion case is scheduled to begin on April
23, 1990. Defendants now move for various pre-trial relief.
The indictment in the captioned case charges the defendants
with various offenses arising out of certain financial
transactions entered into by the Cralin partnerships.*fn1
Specifically, the defendants are charged with having entered
into a secret oral agreement with New York Hanseatic Division
("New York Hanseatic")*fn2 on behalf of the Cralin
partnerships pursuant to which New York Hanseatic was paid a
set fee for creating records substantiating certain false
transactions by the Cralin partnerships in government
securities. These transactions led to fraudulent interest
deductions by the limited partners in the amount of
$140,000,000 for the tax year 1981. The second stage of the
transaction was the reporting of false income in the amount of
$132,000,000 for the tax year 1982. That false income was also
passed on to the limited partners.
The charges in the indictment, all of which arise out of the
basic scenario set forth above, are divided into three groups.
Count 1 charges the defendants with conspiracy in violation of
18 U.S.C. § 371. The conspiracy is defined as one extending
from "in or about 1981 through in or about the end of 1985",
one object of which was the evasion of taxes due and owing in
the 1981 tax year. Indictment at ¶ 1.
Counts 2 through 6 charge the defendants with tax evasion
arising out of the 1981 tax returns of various limited
partners. The return of each of those partners forms the basis
for a separate count in the indictment. Although the offenses
arise out of the 1981 tax returns, the indictment charges the
defendants with tax evasion for the period 1981 through 1985.
Counts 7 through 15 charge the defendants with aiding and
assisting in the filing of certain false tax returns for the
Cralin partnerships. Each of the false filings referred to in
this set of charges relates to the 1983 tax year.
Defendants move for various pre-trial relief. Specifically,
defendants move to dismiss counts 1 through 6 as barred by the
statute of limitations. Defendants further move for various
discovery and a bill of particulars. Defendant Foont moves for
a severance. I address these issues in turn.
I. Statute of Limitations
It is common ground that the applicable statute of limitations
in respect of both the conspiracy charged in count 1 and the
tax evasion charges contained in counts 2 through 6 is six
years. 26 U.S.C. § 6531*fn3.
The indictment in the captioned case was filed on October 10,
1989. Thus, in order to be timely filed, the indictment must
charge the defendants with crimes committed within six years of
October 10, 1989, namely on or after October 10, 1983.
Defendants contend that the indictment fails in that regard,
while the government argues that both the conspiracy and the
counts of evasion were not complete until the end of 1985, well
after the October 1983 limitations cutoff date.
Defendants are charged with five counts of tax evasion in
violation of 26 U.S.C. § 7201*fn4. The elements of tax
evasion are familiar:
(1) an attempt to evade or defeat a tax or the payment
(2) an additional tax due and owing; and
Sansone v. United States, 380 U.S. 343, 351, 85 S.Ct. 1004,
1010, 13 L.Ed.2d 882 (1965).
That first element of tax evasion, commonly referred to as the
"affirmative act" requirement or the affirmative act of
evasion, is described by the Supreme Court as "some willful
commission in addition to the willful omissions that make up
the list of misdemeanors," Spies v. United States,
317 U.S. 492, 499, 63 S.Ct. 364, 368, 87 L.Ed. 418 (1943), such as
failure to pay a tax or failure to file a tax return in any
Willful but passive neglect of the statutory duty may
constitute the lesser offense, but to combine with it a willful
and positive attempt to evade tax in any manner or to defeat it
by any means lifts the offense to the degree of felony.
Id. The question presented by the instant motion is when the
statute of limitations began to run.
Defendants contend that the crime was complete, if committed at
all, with the filing of the 1981 tax returns that contained the
allegedly fraudulent deductions. In the alternative, defendants
argue that the counts of evasion were complete with the filing
of the 1982 tax returns that constituted the second prong of
the attempt to evade taxes for the 1981 tax year. In essence,
the government alleges that the defendants engaged in a course
of conduct aimed at evading taxes for 1981, which continued
through 1985 at which time the statute of limitations began to
run. In consequence, the government argues, the instant
indictment was filed only four years after the limitations
period began to run, well within the limitations period.
The indictment alleges the following as affirmative acts of
evasion occurring after October 10, 1983.
(d) From in or about 1981 through in or about 1985, FELDMAN
and FOONT concealed the bogus, fraudulent and pre-arranged
nature of the New York Hanseatic transactions from the
outside accountants of the Cralin partnerships and
attempted to mislead those accountants as to the true
nature of the transactions.
(f) On or about December 1, 1983, FOONT made false
statements and representations to an employee of the IRS,
in the presence of FELDMAN and one of the outside
accountants for the Cralin partnerships, for the purpose of
concealing the fraudulent and pre-arranged nature of the
tax losses passed on to the limited partner-investors of
the Cralin partnerships, . . . , to wit, FOONT told an IRS
agent that there were no oral or written agreements
affecting the 1981 transactions between the Cralin
partnerships and New York Hanseatic.
(g) In or about 1984, FELDMAN made false statements and
representations to an employee of the IRS, in the presence
of FOONT and one of the outside accountants for the Cralin
partnerships, for the purpose of concealing the fraudulent
and pre-arranged nature of the tax losses passed on to the
limited partner-investors of the Cralin partnerships, . . .,
to wit, FELDMAN told an IRS agent that there were no oral
or written agreements affecting the 1981 transactions
between the Cralin partnerships and New York Hanseatic.
(i) Between in or about March 1985 and in or about April
1985, FELDMAN made false statements and representations to
one of the outside accountants for the Cralin partnerships
for the purpose of concealing the fraudulent and
pre-arranged nature of the tax losses passed on to the
limited partner-investors of the Cralin partnerships, . . .,
to wit, FELDMAN lied to the accountant about the
financing for the 1981 transactions between the Cralin
partnerships and New York Hanseatic.
Indictment at ¶ 7(d), (f)-(i).
Defendants concede, as they must, that false statements to an
employee of the IRS constitute affirmative acts of evasion.
United States v. Beacon Brass, 344 U.S. 43, 45-46, 73 S.CT.
77, 78-79, 97 L.Ed. 61 (1952) ("[t]he language of [26 U.S.C. § 7201]
which outlaws willful attempts to evade taxes `in any
manner' is clearly broad enough to include false statements
made to Treasury representatives for the purpose of concealing
unreported income").*fn5 Rather, defendants contend that the
alleged false statements, along with the other affirmative acts
of evasion set forth in the indictment, occurred after the
crime of evasion was complete.
In respect of that first issue, whether the elements of evasion
were present in 1981, it is important to note that the tax
returns at issue were not filed by the defendants. Rather, the
fraudulent tax returns were filed by various limited partners
of the Cralin partnerships to whom the tax benefits of certain
false transactions were passed along. In these circumstances,
it is difficult to view the allegedly false filings as a
"watershed event" for purposes of the statute of
It is defendants' course of conduct preceding and subsequent to
the false filings that constitutes the evasion with which they
are charged. Specifically, the government charges the
defendants with a continuing series of acts ranging in time
from the creation of the allegedly fraudulent transactions with
New York Hanseatic to the defendants' continued and ongoing
concealment of the true nature of those transactions. The
question is whether the last act in such a course of conduct is
that which properly triggers the statute of limitations.
While not cited in the briefs, United States v. Shorter,
608 F. Supp. 871 (D.C.D.C. 1985), aff'd, 809 F.2d 54 (D.C.Cir.),
cert. denied, 484 U.S. 817, 108 S.Ct. 71, 98 L.Ed.2d 35
(1987) is instructive. In that case the government had charged
the defendant in one felony count of "willful attempt to evade
the payment of income taxes due for the years 1972 through
1983, in violation of 26 U.S.C. § 7201." 608 F. Supp. at 873.
Shorter had filed allegedly fraudulent tax returns for the
years in question. The indictment was returned in 1984. The
defendant argued that the indictment was time-barred as to the
tax years between and including 1972 and 1977 and consequently
that allegations as to those tax years should be stricken from
the indictment. The defendant further argued that the single
felony count was impermissibly duplicitous and should be
dismissed, inasmuch as it alleged twelve separate offenses,
namely evasion for each tax year 1972 through 1983.
The district court rejected defendant's first claim, namely
that certain of the allegations of evasion were time-barred.
[T]he statute of limitations does not ipso facto rule out
prosecution with respect to taxes owing prior to 1978, for the
offense of tax evasion is not necessarily committed only in the
year when the tax was due and payable. That is so because the
existence of a tax deficiency is but one of the two essential
elements of the crime, the other being an affirmative act of
willful evasion. Sansone v. United States, 380 U.S. 343, 351,
85 S.Ct. 1004, 1010, 13 L.Ed.2d 882 (1965); Spies v. United
States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418 (1943). An
act constituting evasion which occurs during the limitations
period brings the prosecution within the statute of limitations
even if the taxes being evaded were due and payable prior
thereto. United States v. Trownsell, 367 F.2d 815 (7th Cir.
1966); United States v. Mousley, 194 F. Supp. 119 (E.D.Pa.
1961), aff'd without opinion, 311 F.2d 795 (3d Cir. 1963);
United States v. Sclafani, 126 F. Supp. 654 (E.D.N.Y. 1954),
aff'd on other grounds, 265 F.2d 408 (2d Cir. 1959); see
also, United States v. Malnik, 348 F. Supp. 1273 (S.D.Fla.
1972), aff'd on other grounds, 489 F.2d 682 (5th Cir. 1974).
It follows that the indictment in this case is not subject to
dismissal even with respect to the evasion of taxes due prior
to 1978 if it is supported by proof of one or more
affirmative acts of evasion committed by the defendant within
the past ...