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United States v. Ozbay

February 27, 2007

UNITED STATES OF AMERICA,
v.
ZIYA OZBAY AND YALCIN OZBAY, DEFENDANTS.



The opinion of the court was delivered by: Gary L. Sharpe U.S. District Judge

Decision and Order

I. Introduction

Ziya and Yalcin Ozbay move for judgments of acquittal following their convictions for structuring monetary transactions and tax related offenses. See Ziya Ozbay Mot., Dkt. No. 237; Yalcin Ozbay Mot., Dkt. No. 238; see also FED. R. CRIM. P. 29(c). After the government's direct case, the court granted partial judgments of acquittal because the evidence was insufficient to prove that either defendant had aided and abetted offenses related to Birol Ozbay's corporations. For the reasons that follow, the current motions are denied.

II. Discussion

A. Standard of Review

The standard of review governing a motion for judgment of acquittal is well-established. The ultimate question is "whether, after viewing the evidence in the light most favorable to the government, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." U.S. v. Espaillet, 380 F.3d 713, 718 (2d Cir. 2004) (quoting Jackson v. Va., 443 U.S. 307, 319 (1979)). When, as here, defendants challenge a verdict, they bear a heavy burden to demonstrate that the underlying evidence is "nonexistent or so meager that no reasonable jury could have..." convicted. Espaillet, 380 F.3d at 718 (internal quotation marks and citation omitted). The court must resolve issues of credibility in favor of the verdict, it must credit every inference in favor of the government, and the proof need not exclude all possible hypotheses of innocence. See id.; see also U.S. v. Desena, 260 F.3d 150, 154 (2d Cir. 2001). The court must not be myopic in its analysis. Instead, it must consider the totality of the evidence, each piece in conjunction with the others. See U.S. v. Cassese, 428 F.3d 92, 98-99 (2d Cir. 2005) (citing U.S. v. Glenn, 312 F.3d 58, 69 (2d Cir. 2002); U.S. v. Guadagna, 183 F.3d 122, 130 (2d Cir. 1999)). The court has no authority to substitute its evaluation of the evidence for that of the jury, especially since a judge's personal views are irrelevant. See Espaillet, 380 F.3d at 718.

B. The Counts of Conviction

As a principal or an accessory, Ziya Ozbay was convicted of failing to file corporate tax returns for Ozbay Service Center, Inc. for the years 1999-2003. See 26 U.S.C. § 7203 and 18 U.S.C. § 2; see also Superseding Indictment ("Indictment"), Cts. 2-6, Dkt. No. 163. His motion must be denied if any rational trier of fact could have found that he, as a principal or an accessory: (1) was required by law or regulation to file an Ozbay Service Center, Inc. corporate tax return; (2) failed to file such a return for each tax year; and (3) that his failure to file was knowing and willful. See 3 L. Sand, et.al., Modern Federal Jury Instructions-Criminal, § 59.02. As principals or accessories, Ziya Ozbay (Counts 7, 11-15) and Yalcin Ozbay (Counts 7 and 11, 17-35) were convicted of failing to pay employee withholding and Federal Insurance Contribution Act ("F.I.C.A.") taxes (collectively, "trust fund taxes") on behalf of employees at Ozbay Service Center, Inc. (Counts 7, 11-15), Erin and Faek Corporation (Counts 17-33), and U.S. Mart, Inc. (Counts 34-35). See 26 U.S.C. § 7202 and 18 U.S.C. § 2; see also Indictment, Cts. 7, 11-15, 17-35, Dkt. No. 163. Their motions must be denied if any rational trier of fact could have found that they, as a principal or an accessory: (1) were required to collect, account for, and pay over trust fund taxes owed by an employee; and (2) that they willfully failed either to collect, or to account for, or to pay over such taxes. Responsible persons must comply, and when determining who is a responsible person, no single factor is dispositive. Relevant considerations include whether an individual: (1) is an officer or member of the board of directors; (2) owns shares or possesses an entrepreneurial stake in the company; (3) is active in the management of the day-to-day affairs of the company; (4) has the ability to hire and fire employees; (5) makes decisions which, when and in what order outstanding debts or taxes will be paid; (6) exercises control over daily bank accounts and disbursement records; and (7) has check-signing authority. See Slodov v. U.S., 436 U.S. 238 (1978); Winter v. U.S., 196 F.3d 339 (2d Cir. 1999); U.S. v. Evangelista, 122 F.3d 112 (2d Cir. 1997); U.S. v. Rem, 38 F.3d 634 (2d Cir. 1994).

Yalcin Ozbay was convicted of filing a false 2002 personal tax return by falsely under-reporting other income. See 26 U.S.C. § 7206(1); see also Indictment, Ct. 16, Dkt. No. 163. His motion must be denied if any rational trier of fact could have found that he: (1) subscribed and filed a 2002 joint Individual Income Tax return; (2) that the return contained a written declaration that it was made under penalty of perjury; (3) that he did not believe the return to be true and correct as to every material matter; and (4) that he acted willfully. See 3 L. Sand, et.al., Modern Federal Jury Instructions-Criminal, § 59.03.

As principals or accessories, Ziya and Yalcin Ozbay were convicted of structuring monetary transactions at various banks in order to avoid $10,000 reporting requirements. The indictment alleged that they did so from November 4, 1999-June 30, 2003, at Key Bank (Count 45), from October 29, 1999-January 16, 2002, at Key Bank (Count 46), and from January 15, 2002-May 15, 2002, at Fleet Bank (Count 47). See 31 U.S.C. §§ 5324(a)(3), (d)(1) and 18 U.S.C. § 2; see also Indictment, Cts. 45-47, Dkt. No. 163. Their motions must be denied if any rational trier of fact could have found that they, as a principal or an accessory: (1) engaged in acts of structuring; (2) with knowledge that the financial institutions involved were legally obligated to report currency transactions in excess of $10,000; and (3) had the intent to evade this reporting requirement. Structuring a transaction occurs if a person, acting alone or in conjunction with others, conducts or attempts to conduct one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading the reporting requirements. It includes breaking down a single sum of currency exceeding $10,000 into smaller sums, or the conduct of transactions, or a series of currency transactions at or below $10,000. The transaction or transactions need not exceed the $10,000 reporting threshold at any single financial institution on any single day to constitute structuring. Where there is evidence of a pattern of structuring as well as evidence of other transactions which generated CTR filings, it is permissible to infer that a person knows of and intends to evade currency reporting requirements. See 3 L. Sand, et.al., Modern Federal Jury Instructions-Criminal, § 50B.05.

As principals or accessories, Ziya and Yalcin Ozbay were convicted of obstructing and impeding the Internal Revenue Service by, inter alia, engaging in the illegal activity already recited in the earlier counts of conviction. See 26 U.S.C. § 7212(a) and 18 U.S.C. § 2; see also Indictment, Ct. 1, Dkt. No. 163. Their motions must be denied if any rational trier of fact could have found that they, as a principal or an accessory: (1) corruptly; (2) endeavored; (3) to obstruct or impede the due administration of the revenue laws. A defendant acts corruptly when he intentionally seeks to secure an unlawful advantage or benefit either for himself or another. The term "corruptly" encompasses activities that seek to thwart the efforts to execute the internal revenue laws. "Endeavor" means to knowingly and intentionally act or to knowingly and intentionally make any effort which has a reasonable tendency to bring about the desired result. The indictment alleged that the defendants violated this statute in various ways, including: (1) intentionally failing to maintain books and records that fully and accurately recorded the operation of named corporations; (2) intentionally failing to provide necessary books and records to their accountant as to various named corporations; (3) intentionally failing to keep their various corporate operations separate and distinct; (4) intentionally failing to pay federal withholding taxes and FICA taxes for various gas station employees; (5) hiding their total cash deposits from the internal revenue service by structuring cash deposits and avoiding the CTR requirements; (6) intentionally failing to file corporate income tax returns for various named corporations; (7) intentionally failing to file personal income tax returns; and (8) intentionally filing inaccurate personal and corporate income tax returns as specified. See 3 L. Sand, et.al., Modern Federal Jury Instructions-Criminal, § 59.05.

Regarding the counts charging violations of 18 U.S.C. § 2, the law governing principal and accessorial liability is clear. A defendant may be convicted if he committed each element of a crime himself (said otherwise, he was the principal), or if he aided and abetted the commission of a crime by others or he was aided and abetted in the commission of the crime by others. Thus, guilt may be established without proof that a defendant personally did every act constituting an offense. To aid and abet means more than just knowing that a crime is being committed. Instead, a defendant must knowingly and willfully associate himself with a crime, he must participate in it as something he wishes to bring about, and he must seek by his actions to make it succeed. He may be convicted if he counsels or induces its commission with the requisite mens rea.

Regarding mens rea, participation must be "willful," meaning that action is taken voluntarily and intentionally with a bad purpose to disobey the law. Participation must be "knowing," meaning that a defendant has an awareness of the existing circumstances. In other words, if a defendant is fully aware that what he is doing plays a significant role and intentionally participates in facilitating a transaction prohibited by law, he is equally guilty as the person who directly performs the illegal acts, even though the other played a greater or much larger role in the perpetuation of the crime. Aiding and abetting, or causing or inducing another to commit a crime must be determined by one's overt conduct, acts and statements; although it is ...


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