Jury Instructions in Religious Tax Protestors' Case Constructively Amended Indictment

United States v. McKee, No. 05-3297 (Oct. 29, 2007), involved the prosecution of three members of the Reformed Israel of Yaweh ("RIY") religious sect, which opposes the payment of taxes to support war. Two of the defendants were owners of a small carpentry and home renovation business, and the third was the wife of one of the defendants. The Third Circuit vacated the defendants’ convictions for failing to pay employment taxes because the jury instructions constructively amended the indictment. The indictment charged the defendants with preparing, signing, and causing the filing of false employment tax returns. The instructions listed several examples of conduct sufficient to establish the charged conspiracy, including falsifying records and failing to report wages to an accountant. Although the government introduced evidence that the defendants falsified books and records and withheld information from the company’s accountant, this conduct was never charged in the indictment. Thus, the Court held, the instructions had the effect of broadening the indictment to include uncharged conduct. The Court further noted how difficult it is for a defendant to prove actual prejudice in this situation and went on to find that the government failed to rebut the presumption of prejudice arising from the constructive amendment.

The Court rejected most of the defendants’ other arguments. It held that the government established sufficient evidence on the conspiracy and tax evasion charges and rejected the defendants’ challenges to the admission of certain evidence. Notably, the Court found sufficient proof of an agreement to conspire from evidence of RIY’s anti-tax teachings, the defendants’ commitment to those teachings, and their positions within RIY. However, the Court found insufficient evidence to sustain the wife’s conviction for failing to file individual tax returns. The government claimed that this defendant, who served as the company’s bookkeeper, had a tax obligation (despite the fact that she did not receive a salary from the company) because she used the proceeds of three company checks to purchase two cars and paint her house. The Third Circuit rejected this argument and held that the government did not prove that the proceeds were intended as compensation for her bookkeeping work---they were just as likely to have been contributions of marital support or a gift from her husband. Moreover, there was no evidence that the defendant knew that the checks were intended as income.