The opinion of the court was delivered by: Hon. Hugh B. Scott
Before the Court are defendant's motion for reconsideration of the Order (Docket No. 17) denying his earlier motion for disclosure (Docket No. 9*fn1 ).
Defendant was indicted on March 22, 2007, for four counts of willful failure to file tax returns for tax years 2000-2003, in violation of I.R.C. § 7203 (Docket No. 1), a misdemeanor with a fine of no more than $25,000, and imprisonment of up to one year, I.R.C. § 7203. The Government alleges that defendant, a chiropractor, had a gross income totaling over $225,000 (id. ¶¶ 2, 4).
Defendant's Document Demands
Defendant sought documents he believed are material to the preparation of his defense, "which will principally center upon the defendant's retention of a tax protestor organization known as American Rights Litigators ['ARL'] in early 1997 to represent his interests before" the Internal Revenue Service ("IRS" or the "Service") (Docket No. 10, Def. Memo. at 1). Defendant filed powers of attorney ten times with the IRS naming ARL as his agent, but the Service ignored defendant's communications (id. at 1-2). The discovery defendant sought would show how the IRS treated similar non-filers and filers who used ARL or ARL's tax protest arguments in opposing filing tax returns; defendant now argues that this mischaracterizes his argument (Docket No. 21, Def. Reply at 2 n.1).
The Government responded that it has produced seven boxes of documents for defense review (Docket No. 12, Gov't Response at 7) and that the scope of defendant's present demands were overbroad, seeking all IRS guidelines regarding handling of non-filer cases, all form letters, memos, and other correspondence prepared by the IRS, and all Service memoranda, reports, and other writings (up to April 2004) in response to ARL arguments (id. at 8-9). The Government argued that IRS guidelines, policies, and procedures for dealing with non-filers have nothing to do with defendant's intent, the sole issue in his defense. The Government further contended that letters sent by the IRS to other taxpayers also are not probative of defendant's intent and IRS's arguments in response to the ARL's positions are irrelevant. (Id. at 12.) The Government concluded that these documents were privileged and exempt from disclosure as internal government documents under Federal Rule of Criminal Procedure 16(a)(2) (id. at 16).
This Court denied defendant's motion to compel (Docket No. 17). Under the standard of the United States Court of Appeals for the Second Circuit, Federal Rule of Criminal Procedure 16(a)(1)(E)(i) entitles defendant only to production of documents necessary to prepare for arguments in response to the Government's case-in-chief, United States v. Armstrong, 517 U.S. 456, 462 (1996); United States v. Rigas, 258 F. Supp. 2d 299, 306 (S.D.N.Y. 2003) (Docket No. 17, Order at 4). This Court noted that the Armstrong Court defined "defendant's defense" in the former version of Rule 16(a) to mean "the defendant's response to the Government's case-in-chief," 517 U.S. at 462, with the defense in the narrower role as "shield" "refut[ing] the Government's arguments that the defendant committed the crime charged," rather than the more aggressive "sword" role of challenging the prosecution's conduct of the case, id. Hence, the discovery sought had to be material in preparing a defense, with defendant bearing the burden of establishing a prima facie case for its materiality, United States v. Stevens, 985 F.2d 1175, 1180 (2d Cir. 1993); United States v. Elliott, 363 F. Supp. 2d 439, 449 (N.D.N.Y. 2005), and this Court having broad discretion in deciding what is and is not material, see 25 Moore's Federal Practice § 616.05[b][i], at 616-48 (3d ed. 2003) (Docket No. 17, Order at 4). If a defendant seeks immaterial internal Government documents, the privilege under Rule 16(a)(2) precludes their disclosure, Elliott, supra, 363 F. Supp. 2d at 449. Under Stevens, 985 F.2d at 1180, materiality is defined as material either countering the Government's case or bolstering a defense. "Materiality means more than that the evidence in question bears some abstract logical relationship to the issues in the case. There must be some indication that pretrial disclosure of the disputed evidence would have enabled the defendant significantly to alter the quantum of proof in his favor." United States v. Maniktala, 934 F.2d 25, 28 (2d Cir. 1991) (quoting United States v. Ross, 511 F.2d 757, 762-63 (5th Cir.), cert. denied, 423 U.S. 836 (1975)); Elliott, supra, 363 F. Supp. 2d at 449.
Defendant sought three classes of documents: IRS guidelines regarding the handling of non-filers such as defendant; IRS form letters and other correspondence sent to non-filers; and IRS arguments to contentions raised by ARL. Under either the Stevens standard (significant alteration of quantum of proof in defendant's favor in either countering the Government's case or bolstering defendant's) or the more liberal discovery standard from other Circuits, this Court found that defendant failed to establish a prima facie case of materiality for these categories of documents (id. at 8). It was not clear whether IRS policies or forms of communication applicable to non-filers are material to the elements of the offense charged against defendant, namely whether he intended not to file his tax returns. The initial Order found that the IRS responses to ARL's arguments for other taxpayers was not material to the Government's case-in-chief or the defense in this prosecution. (Id.) This Court rejected application of other Circuits' more generous construction of materiality under Rule 16(a), cf. United States v. Halpin, 145 F.R.D. 447, 450 (N.D. Ohio 1992) (quoting United States v. Gaddis, 877 F.2d 605, 611 (7th Cir. 1989) (per curiam)); United States v. Lloyd, 992 F.2d 348, 351 (D.C. Cir. 1993) (quoting United States v. Felt, 491 F. Supp. 179, 186 (D.D.C. 1979)), and excluded impeachment as a basis for materiality to compel the Government's production (id. at 5-9).
That Order also held in abeyance the Government's motion in limine (Docket No. 8) of certain documents for tax years before those indicted in this case and denied defendant's cross-motion (Docket No. 11) to produce in limine items (Docket No. 17, Order at 9-10, 11).
After entry of this Order denying defendant's relief, defendant moved for its reconsideration (Docket No. 18). He now argues that the Court overlooked Second Circuit precedent on materiality under Rule 16(a)(1)(E)(i)and applied an overly narrow construction of Armstrong and Circuit case law (id. Def. Atty. Affirm. ¶¶ 4, 9). He contends that Maniktala recognizes the impeachment value of materials as satisfying the materiality standard to compel production, 934 F.2d at 28 (id. ¶ 20), and cites Magistrate Judge Foschio's decision in United States v. Holihan, 236 F. Supp. 2d 255, 262 (W.D.N.Y. 2002), as recognizing the use of items to impeach Government witnesses and hence holding that these items were material to the defense (id. ¶ 21). Defendant argues that this Court thus overlooks the impeachment value of the data he seeks (id. ¶¶ 23-26).
The Government responds that the Court in Holihan, supra, 236 F. Supp. 2d at 266, found the discovery would have a significant effect on defense and hence was material (Docket No. 20, Gov't Response at 3, citing Holihan, supra, 236 F. Supp. 2d at 266, emphasis added). In Holihan, defendant was a bank employee charged with embezzlement and raised as a defense that other bank employees had access to the computers that debited the accounts at issue. Defendant intended to prove this by seeking production of "sign off" and "sign on" sheets for the computers and suspicious activity reports for other employees, to use these documents to impeach Government witnesses (Docket No. 20, Gov't Response at 3-4). The Government contends that Holihan showed materiality of the items sought and their centrality to the offense charged (id. at 4). The Government repeats the central issue in the present case is whether defendant knew that he had a duty to file tax returns (id.).
The Government next argues that defendant fails to show how the sought after items are material to any issue in this case (id. at 7). The Government notes that it produced copies of notices sent to defendant, including form responses (id. at 12, Exs. A, B), apparently similar to the ones defendant seeks for third party non-filers. The form letter asserts generally the correctness of IRS's position, that others are misleading taxpayers to their detriment (possible costs, penalties, interest, and/or ...