Saturday, December 3, 2011

UPDATE: Can an accused tax evader submit evidence of a good-faith belief without taking the stand to testify to it?


In the posts below, I discussed a district court order holding that Chris Kokenis, an accused tax evader, had to take the stand to assert the "good faith defense."  On the day before Thanksgiving, the Seventh Circuit Court of Appeals issued its opinion.  It finds that the district court was wrong to rule that Kokenis had to take the stand, because evidence of good faith can be proved by circumstantial evidence and hearsay statements of the defendant.  But the court goes on to conclude that the error was harmless because (1) there was no evidence at all of a good-faith belief in this case; (2) even the supposed good-faith didn't apply to all the charges; (3) the good-faith defense was in fact part of the charge, since the jury was instructed that Kokenis's conduct had to be "willful" and the good-faith defense is simply an assertion that the defendant did not act willfully.

ORIGINAL POST: 10/9/2010

Willfully evading federal income taxes is a felony. 26 U.S.C. § 72013. In the context of the tax laws, a “willful” violation is the “voluntary, intentional violation of a known legal duty.” United States v. Cheek, 498 U.S. 192, 201 (1991). But, under Cheek, failing to pay income taxes because of a genuine misunderstanding of the tax laws or a good-faith belief that no tax is due—even an objectively unreasonable misunderstanding or belief—is not a felony (though it may be a misdemeanor). Let’s call this the Wesley Snipes defense.

This is background for an interesting little order by the always-entertaining Judge Milton Shadur of the Northern District of Illinois in the case of United States v. Kokenis. A jury recently found Kokenis guilty on eight counts of tax evasion. He moved for a new trial, arguing that the judge improperly excluded evidence relating to his good-faith defense under Cheek. Judge Shadur denies the motion for an interesting reason: he says that Kokenis could not advance this defense because he did not take the stand to testify in his own defense:

No one required Kokenis to testify, nor could any consideration be given to his decision not to do so (and this Court of course so instructed the jury). But in order to advance, in the necessary good faith, any assertion of a good faith defense and thus to bring Cheek into play, Kokenis had to take the stand, for no one else could demonstrate his good faith belief. Good faith beliefs, by definition, do not exist in a vacuum.
Kokenis’s lawyers argue that requiring him to testify improperly shifted the burden of proof from the government to Kokenis. Since it is the government’s burden to prove that the tax evasion was willful, it has to prove beyond a reasonable doubt that he didn’t have a good-faith belief. According to the Supreme Court, this “requires negating a defendant’s claim of ignorance of the law or a claim that, because of a good faith misunderstanding of the law, he had a good faith belief that he was not violating any of the provisions of the tax laws.” Cheek at 202. Judge Shadur’s argument, apparently, is that there is no “claim of . . . a good faith belief” because Kokenis never took the stand to make such a claim. As the judge puts it, “an individual’s good faith belief cannot be established by his or her lawyers’ ipse dixit.”

Seems to me that Kokenis was trying to establish his good-faith belief not through his lawyer’s ipse dixit but rather through the excluded evidence.  If the excluded evidence actually proved Kokenis's belief or that it was held in good faith, I think it should have been admitted.  But if it merely tended to prove that a reasonable person might have held such a belief, it is irrelevant absent other evidence (such as, but not limited to, Kokenis's testimony) that Kokenis himself actually held that belief.  Either way, Kokenis seems to have a decent issue for appeal.


I did just a little research to see if I could find a case where the good-faith defense had been raised and considered despite the defendant's failure to testify.  I found one case--United States v. Schiff, 801 F.2d 108 (2d. Cir. 1986)-- very quickly.  I'm sure there are others.

UPDATE 9/13/2011:

The appeal briefs are in and argument is scheduled for September 28th.  I am hoping to attend and give a report of the proceedings.


  1. I was the jury foreman on this case...the defense did a poor job...showing pictures of the office several times...trying to blame the was a no brainer. He pays his rehab on his home with the company monies...people, please.

  2. Thanks for the comment, Mr or Ms Foreman. Doesn't sound like there's much question that the guy deserved a guilty verdict based on the evidence that was admitted. The only question this raises is whether his conviction might get reversed because Judge Shadur's evidentiary rulings arguably punished Kokenis for exercising his fifth amendment right not to testify. My guess is "no" but it is kind of an interesting "legal" question.

  3. Can you please provide a cite for the original jury trial case. Thanks,

  4. Steve --

    As far as I know, there is no freely available decision relating to the "original jury trial case." Most of the docket materials -- including briefs regarding this good-faith issue -- are available on the Northern District's website if you have a Pacer account. The case file number is 1:07-cr-00801.

    The judge's post-trial order is unpublished, but can be found at 2010 U.S. Dist. LEXIS 107884 (and of course is linked to in my post above).

    As long as I'm updating this post, Kokenis was sentenced last week to 71 months' imprisonment. On Friday, Kokenis filed his notice of appeal to the Seventh Circuit. Presumably the court's exclusion of the good-faith defense will be Kokenis's main argument on appeal. Should be interesting to see how it comes out.

  5. Where does it say in the Schiff case that Schiff failed to testify? That would be a useful citation if true. Has anyone found other cases? Has anyone seen the Sventh Circuit briefs?

  6. Page 110:

    "Because of the lack of dispute over Schiff's failure to file tax returns or pay taxes, both the government and Schiff concentrated at trial on Schiff's criminal intent or lack of it and the question of whether he had concealed or attempted to conceal income. Schiff did not testify. The government sought to prove Schiff's evasive intent and knowledge of the tax law through his own writings, tapes of his speeches, evidence of his dealings with banks in Switzerland and the Cayman Islands and evidence that Schiff used and recommended the use of special pens with nonreproducible ink in order to thwart Internal Revenue Service attempts to photocopy financial records."

    Kokenis's opening brief at the 7th Circuit isn't due until 5/4.

    I haven't done any further research on the topic since my original post.


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