Explanation: The "Supplemental" appeal emphasized the harm done to Irwin, Cindy and Larry by Dawson's mendacious instructions to the jury - and was written before Irwin had the trial transcript available (fifteen months after it ended!)
This "Supplement" to the "Supplemental" appeal was written after the transcript became available and focusses on the wicked way in which Dawson bound and gagged him during the course of the trial.
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT UNITED STATES OF AMERICA Docket No. 06-10199 Plaintiff/Appellee District Court No. 0978-2: -04-00119 KID v. IRWIN A. SCHIFF at al, Defendant/Appellant ________________________________________________________________________When Defendant Schiff filed his Supplemental Appeal Brief (dated January 12, 2007), he had not as yet received any portion of his trial transcript. Since filing his Supplemental Appeal Brief Defendant has received portions of that transcript, excerpts of which are highly material to issues raised in his Supplemental Brief, but which he could not reference at that time. DEFENDANT'S SUPPLEMENT SUBMISSION
TO HIS SUPPLEMENTAL APPEAL BRIEFA.
On pages 3-6 of his Supplemental Appeal Brief, Schiff pointed out that Judge Dawson's jury instruction in which he charged the jury that Code sections "1, 61, 63 and 6012 working together make an individual liable for the income taxes," was contrary to the 9th Circuit's holding in Roat v. C.I.R., 847 F2d. 1379, 81 in which this Court held, among other things, that, "Tax policy calls for statutes to be read independently." On page 5042, line 17, Schiff pointed out to the trial court, "There's no such thing. Sections don't work together. There is no specific section in the Internal Revenue Code that makes anybody liable." Thus Schiff objected to the court's giving this erroneous instruction to the jury.
B.
On page 10-12 of Schiff's Supplemental Appeal Brief, Schiff pointed out why all of the trial court's instructions to the jury concerning the legal nature of the IRS and the authority of the IRS agents were exercised contrary to law. On page 5046, line 14-15 of the trial transcripts, defendant took exception to the court's claim that the IRS is an "agency of the United States." Schiff further pointed out to the court that "the IRS has never been created as an agency of the United States Government." On page 5043 and 5044 of the trial transcript, Defendant explains that the court's claim, that IRS agents have delegated authority from the Secretary of the Treasury to collect and enforce the income tax is also a false claim and additionally that the court's claim that "the Internal Revenue Service is authorized by Congress to enforce and administer the Internal Revenue Code" is dead wrong. Schiff also stated (page 5042) that "Congress has given no authority to the Internal Revenue, but that All authority in the Code is given to the Secretary." Apparently, based upon this objection, the Court modified its instruction and subsequently claimed that the IRS received its authority, not from Congress, but from a delegation of authority from the Secretary. However, such a claim was still erroneous, since it was further clarified that while the "Secretary is authorized to delegate that authority (such a delegation order would have to be) published in the Federal Register before it could have any force and effect of law." And that any such delegation order "certainly hasn't been published. So, that jury instruction (on the legal nature and authority of the IRS) is dead wrong as a matter of law." (P. 5043 L 6-8)
C.
In Segment V of his Supplemental Appeal Brief, Appellant stated that the trial court's charge to the jury regarding the legal meaning of "income" for tax purposes was contrary to the meaning given to that term by the bedrock Supreme Court cases and the clear intent of Congress as reflected in House Report No. 1337 and Senate Report 1622 (83rd Congress, 2d Session) This is shown in the transcript pages 5041 and 5042. Schiff specifically called the trial court's attention to how its instruction on "income" was contrary to those Congressional Reports and the Supreme Court decision of Eisner v. Macomber. Defendant put the trial court on notice that the proper jury instruction on the meaning of income was that "When used in this trial, the word 'income' is used in the Sixteenth Amendment (and) constitutional sense, and not in it's ordinary sense," as was specifically held in those congressional reports. However, instead of giving a jury instruction in conformity with those reports, the court gave an instruction that violated those reports.
Thus Defendant Schiff took exception to each of the jury instructions he complained about in his Supplemental Appeal when those erroneous jury instructions were given.
II
Not content with misleading the jury with respect to various aspects of the tax law when he gave the jury charge, the trial court insisted on further misleading the jury during the Government's case in chief. On page 3542 of the trial transcript, the court gave an "interim instruction".containing numerous misstatements of law; of which defendant took vigorous exception prior to the court's giving the instructions. In giving its interim instruction, the trial court misled the jury by making the following false claims as part of its interim instruction:
1) "The law makes individuals liable to pay income taxes." But no such law exists. If it did, the court would have identified "the law" but no such "law" was identified by the court.
2) "Taxable income is defined in section 63." Taxable income is not defined in section 63, for the simple reason that its "definition" in that statute is made dependant on the definition of "income" which is not defined in the Code. Appellant has already explained that the Supreme Court in Eisner v. Macomber stated that Congress has no authority to define income. The legal meaning of income was contained in those Congressional Reports, which the trial court willfully ignored.
In addition, the trial court states (lines 8-9) that "wages and salaries" are "included" in "income" as that term is used in section 61. This was totally false and a misleading instruction. While "wages and salary and compensation for personal services" were identified as falling within the meaning of "income" in section 22 of the 1939 Code, these items were specifically eliminated from section 61 of the 1954 Code. By specifically eliminating "wages and salary" from the 1954 Code, Congress exhibited its clear intent that such sources of revenue could not be regarded as falling within the meaning of taxable "income" as that term is used in section 61. And "wage and salary" cannot be regarded as falling within the term "compensation for service", since that would mean "compensation for personal service" - a term used in the 1939 Code, but also eliminated from the 1954 Code. "Compensation for service" as used in the 1954 Code can only mean compensation for services as received by a corporation, since such compensation would not be for "personal" service. So any claim, as made by the court in this case, that "wages and salary" fall within the meaning of taxable income as used in section 61 is to totally and falsely mislead the jury as to what falls within the meaning of "income" as referred to in section 61.
3) Next the court states that "under Internal Revenue Code Section 6012 individuals are required to file an income tax return." This instruction is false. There is no provision in section 6012 that states that persons are "required" to file tax returns. If such a provision applied to income tax it would be found in Subtitle A, not in Subtitle F. In addition, section 6012 refers to persons who "shall" file returns, not that they are "required" to do so. And the use of "shall" (and not the word "required") in that context is the equivalent of "may." [1] If section 6012 "required" the filing of an income tax return, it would be so stated in the Disclosure (Privacy) Act Notice in a 1040 booklet. (Page 1 of Defendant's 1st set of Excerpts of Record), but is not - as explained further on. The error here is further compounded by the statement that one is "required" to file "without assessment or Notice and Demand." There is absolutely no statute nor any directive from the Treasury Department that says any such thing. It is obvious that the court here is simply making up laws that it thinks might be helpful to the Government.
4) Next the court states that such sections as: Sections 1, 61, 63 and 6012 (as referenced in paragraphs two and three of page 3542 line 15-16) "working together make an individual liable for income taxes." Defendant has already explained (page 4 of his Supplemental Appeal Brief) why this instruction is directly contrary to the holding of the 9th Circuit in Roat v. C.I.R., 847 F2d. 1379, 1381.
Thus each and every "Interim instruction" given by the court was contrary to law and the information given the public, as contained in the "Disclosure Act Notice" as contained in the 1040 booklet. Defendant Schiff made the court aware of this before he gave his instruction, as shown in the transcript on pages 3527, 3528, 3529, 3535, 3536 and 3538. Schiff advised the court (as shown on pages 3535, 3527 and 3528) that the Privacy Act Notice only directs the public's attention to Code sections 6001, 6011 and 6012; that "if sections 1, 61, and 63 had anything to do with the payment of income tax, then it was incumbent on the Government to put it in the Privacy Act Notice." (page 3538, line 19-21). In addition, the Privacy Act Notice says "you must file a return or statement for any tax you are liable for". It doesn't tell you that "you must file a return for any tax imposed", as in section 1. (page 3527, line 21) Schiff further points out (page 3538) that while the 1939 Code included such items as wages and compensation for "personal service." The '54 Code took out wages and salaries and also took out compensation for personal service and only left in compensation for service. Schiff stated, "the court is fully aware that in adopting the '54 Code in House Report No. 1337 and Senate Report 1622 the U.S. Congress showing its intent in these committee reports, specifically said that income is used in its constitutional sense." And in instructing the meaning of income to the jury in his "interim instruction" the court had to know that it was not instructing the jury in conformity with those Congressional Reports.
Both the Government and the trial court sought to mislead the jury into believing that the mere imposition of a tax was tantamount to making persons "liable" for the tax. However Schiff explained how Code Sections 4402(c) and 4401(a);and 5701 and 5703 first imposed the tax, and subsequently stated who was "liable" and who must "pay" the tax "imposed." (At page 3529). Schiff goes on to state, "So, the imposition of the tax and the liability for the tax are two different things." On page 3528 Schiff informs the court that, "This is a totally illegal and erroneous jury instruction and I vigorously object."
III
In addition to misleading the jury with respect to the law (as shown above) the following are some representative examples of how the court in this prosecution based its rulings on how they might hurt or help the Government's case.
A. WITH RESPECT TO THE TESTIMONY OF CHRISTY MORGAN
On page 1535 (line 18), Ms. Morgan identifies herself as "The civil penalty coordinator in the Frivolous Filer Department in the Examination Branch." On page 1536 (line 3) she states, "I assess the $500 frivolous return penalty while working with counsel regarding arguments (and) asking for legal discussions." On page 1538, it is obvious that Schiff is having trouble reconciling her authority to determine that returns are frivolous and imposing penalties with her claim and the court's claim that she "doesn't claim to be an expert in taxes." (line 10-12) The court states (line 16-17), "She testified what she did. And if you want to cross-examine her but your objections makes no sense to me. You don't like what she did." Schiff tries to point out to the court that he had "no objection to what she did," but wanted her qualified as an expert so he could cross-examine her in the law she was applying when she determined a return was frivolous.
On cross-examination, Schiff attempts to elicit from her "exactly how the frivolous penalty was imposed." (page 1622, line 6) According to her (lines 16-23), when the IRS received a frivolous return, if it (was) something that had not been identified she would "write area counsel, they would research case law, and come up with a decision. It was then passed through the manager, or it could be passed through the national office counsel for approval. And, in turn, we get a written decision back stating, yes... "
On page 1623, lines 6-7, Schiff asks her, "was there any document that said who actually determined who imposed the penalty itself?" Schiff stated (lines 15-16), "in the documents that you provided us, there was no document that stated who imposed the frivolous penalty itself; is that correct?" Her answer was "Area counsel determined it." Schiff then asks her that "no document, you supplied us with stated who took responsibility for imposing the penalty?" It is clear from Ms. Morgan's responses that no particular party signed a document or took personal responsibility for imposing the frivolous penalty. Schiff then asks her if she were familiar with the statute that explained how a frivolous penalty is supposed to be imposed. The transcript shows some mix-up between Code section 6801, which establishes the penalty, and section 6751, which explains "how the penalty is imposed." Seeking to enter Code section 6751, Schiff hands it to Mr. Ignall, one of the U.S. prosecutors, who offers no objection to its admission. (page 1625 line 23). The court then asks Schiff, "All right now what is the relevance of this?" Schiff explains that the statute is "directly related (to) how a (frivolous) penalty gets assessed", which was the very subject of Ms. Morgan's testimony. The court then asks for the document. The court identifies it as section 6751 of the Internal Revenue Code (page 1626, line 18-19). The statutes provides the following, in pertinent part.
1) In general. No penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination or such higher level official as the Secretary may designate.
The statute clearly reveals Ms. Morgan's section did not impose the frivolous penalty on Schiff and thousands of others according to law. Undoubtedly the court recognized this when it read the statute (page 1627 line 2-3) causing the court to say, "I've read it, and it doesn't matter." So the court refused to admit the statute. So, apparently it "doesn't matter" whether or not the IRS imposes penalties according to the law. According to Judge Dawson the IRS is free to impose penalties anyway it likes, and it "doesn't matter" what the law says. Obviously the court did not want the statute to be admitted, since it did not want the jury to find out that the IRS imposes penalties in violation of law. Such a discovery by the jury might prejudice the government's case.
B. LUDDIE TALLY
On page 2954 (line 4), Mr. Tally is identified as being an IRS Revenue Officer for about 20 years. On pages 2957 2960 Mr. Tally explains how he uses liens and levies to "take assets from the taxpayer. It's an involuntary payment." (page 2959 line 20-21) On pages 3001-3004 Tally explains how in 1995, he "prepared the necessary papers to seize Mr. Schiff's automobile And I went out that afternoon and seized Mr. Schiff's automobile." On pages 3012, 3-3016, Mr. Tally testifies how he issued a levy and seized 100% of Schiff's monthly Social Security benefit.
On page 3108 (line 22-24) Schiff asks Tally (laying a foundation) "Did you ever hear of pocket commissions?" and Tally replies, "Yes, Sir." Continuing, Schiff asks "How many kinds of pocket commissions, does the IRS issue?" Before Tally can answer, the prosecutor interrupts with an objection (page 3109, line 1), "I'm going to object -relevance." The court asks Schiff "what is the relevance of this?" and Schiff states, "I want to ask him what kind of a pocket commission he has. I am about to prove to the jury that Mr. Tally had no authority to make all those seizures he testified to, including taking Schiff's automobile and his Social Security benefits, because Mr. Tally will have to admit to only having a non-enforcement pocket commission," as explained in the IRS document taken from the IRS Handbook 1.16.4 included as Document No. 2 in Schiff's accompanying Excerpts of Record. However, both the Government and the court knew where Schiff was going with this (and how devastating it would be to the Government's case) since Schiff had raised the issue of pocket commissions in pre-trial motions. Therefore, both the Government and the court knew that Tally had no legal authority to make the seizures he testified to, both from the fact that he had a non-enforcement pocket commission, and his job description meant he fell into subsection (a) of section 7608, meaning that he could only be authorized to enforce such taxes as liquor, tobacco, and firearms and such other taxes that fell into Subtitle E. [2]
In any case, Judge Dawson sustains the objection on the ground that it is irrelevant as to what kind of pocket commission Tally has. Presumably Tally would have as much authority to seize property with a non-enforcement pocket commission as he would have with an enforcement commission.
On pages 3123-3124 (lines 24-1) the court says, "If you want to show that he didn't have authority then you can call someone." However, when Schiff called John Turner, who had been a revenue officer for 8 years, and who was prepared to testify that he resigned from the IRS when he discovered he did not have the legal authority to seize property, and was doing so only on the basis of fraud and intimidation, the court would only allow him to testify as a character witness. It is clear from the transcript pages 4594-4596 that Judge Dawson was closely monitoring his testimony to make sure he stayed within those narrow limits. Therefore Schiff was not allowed to call witnesses to show that Tally did not have any enforcement authority.
On page 3124 Schiff points out to the court (out of the presence of the jury) that the "IRS issues two kinds of pocket commissions, enforcement and non-enforcement pocket commissions, and (Tally) has a non-enforcement pocket commission, which means he has no enforcement authority within the law and you did not allow me to bring this out." In response, Dawson says, "He has authority," and Defendant replies, "but he has a non-enforcement pocket commission." And the court says, "I don't care about pocket commissions, the witness has authority. He is an employee of the Internal Revenue Service. He has authority." So Schiff asks the court, "But why didn't you let me ask him what kind of a pocket commission (he has)?" And the court replies, "Because it has nothing to do with this." How can Agent Tally's authority to seize property have "nothing to do" with the type of pocket commission he has, since the purpose of these commissions is to establish the authority of the IRS employee to seize property? The fact that Tally might be an IRS employee (actually a Treasury Department employee) has "nothing to do" with his authority to seize property, as would such employment of an IRS custodian or file clerk infuse them with authority to seize property though they too were employees of the IRS. One's authority to seize property would be established by their pocket commissions, the provisions of Code section 7608, and other factors that Defendant need not get into here. Suffice it to say, that the court "didn't care about pocket commissions" because if the court did, and Tally were forced to admit he only had a non-enforcement pocket commission, it would weaken the government's case. So the court pretended that a document that was highly relevant to the defense was irrelevant.
C. CLINT LOWDER
Mr. Lowder is identified on pages 3970 and 3971 as an IRS revenue agent with 30 years of experience. On page 3972 (line 1) he states that he had "specialized training in expert witness and in summary witness training." On pages 3972 and 3973, the Government says that Mr. Lowder is an "expert in tax computations." Presumably, therefore, Defendant will not be permitted to examine him on his alleged knowledge of tax law, which he will soon be testifying about. Therefore, on page 3973 Schiff asks, "I want to know the difference between being an expert on the law and being an expert in tax computations." Mr. Neiman, one of the prosecutors states, "Mr. Lowder will take general accounting principles as defined in the law in order to show what Defendant's Schiff's business income was for the years charged in the indictment." [3] Schiff objects and points out that the use of the word 'income' is a legal conclusion. "There are a hundred pages in 'Words and Phrases' on the meaning of 'income' If he wants to testify that I made certain (bank) deposits, that's okay with me. But whether these deposits constitutes 'income' within the meaning of the law is a legal conclusion and he doesn't have the background and training to testify as to what constitutes 'income' If he does, I want to cross-examine him on his understanding of the word 'income.'" The court rules that Schiff's objection is premature. "You have interrupted (him) before he has testified. you can raise it when it is timely." (However, as shown further on, when Schiff does timely object, it is immaterial, since no argument on this issue is permitted.)
On page 3976 (line 9-10), Mr. Lowder states that "in each and every examination (and he testified he had done between 1,500 -2,000), I would have to determine what constitutes income." Therefore Schiff now timely objects and states, "He's determining (income) in the ordinary sense he can't use the word 'income' unless the Government puts on a witness to define the term 'income' (since) 'income' is not defined in the Internal Revenue Code." What Schiff was attempting to say was all Mr. Lowder actually did was to check deposits Schiff made to his bank accounts. However, whether these deposits constituted "income" within the meaning of the law was something else again that the Government never proved, or even attempted to prove. In response, Mr. Neiman, now reminds the court that it "has already instructed the jury as to what 'income' is." The court then states (page 3977), "The Court has given the jury a definition of 'income' and an interim instruction. That is the law of this case. your objection is over ruled." Therefore, Mr. Lowder never has to explain where he got his definition of income from, whether or not he computes income in the ordinary sense, or in the constitutional sense, or even if he understands the difference.
On page 4142 Mr. Lowder states in cross-examination that he "was attempting to reconstruct your income for the years 1997 through 2002" - years that I reported I had zero income. (Schiff obviously had no income in the constitutional sense in any of those years.) Schiff then asks him, "when you did that, were you doing it legally or illegally?" Mr. Lowder responds by claiming that, "I was doing it legally." Therefore Schiff asks him (while holding a copy of the IR Code in his hand), "Did you ever see a law that allowed you to do that?" Mr. Neiman, one of the prosecutors says "object", but states "I'd like to hear the answer." At which point Schiff addresses Mr. Lowder and states, "Can you take your Code book (which Schiff attempted to hand him) and show me a law where you are authorized to do that." The court immediately says, "Mr. Schiff, the Court will instruct on the law move on." However, the court could never instruct on the law that states that revenue agents such as Mr. Lowder are authorized to determine someone's total tax. since no such law exists.
However, in this case, Mr. Lowder had already testified that what he was doing, he was doing "legally." Therefore he had to be familiar with a law that allowed him to calculate defendant's "total taxes" for the years 1997-2002, which he testified he had done thousands of times. So, why wouldn't the court allow him to identify that statute? Because, defendant suggests, that no such statute exists. There is no statute in the Internal Revenue Code that allows the Secretary (let alone the IRS) to determine a person's "total tax," as Mr. Lowder claimed to have done here. Therefore, the court prevented Mr. Lowder from having to produce the statute at issue, since his inability to do so would have substantially undermined the prosecution's case, and bolstered the defense. [4]
CONCLUSION
There would be no point in providing the Court with additional examples showing how the trial court issued irrational and prejudicial rulings in the interest of promoting the Government's case, while frustrating Defendant's ability to defend himself. However, Defendant does not believe in beating a dead horse; the above three examples should be proof enough. Based on the number and gravity of the trial court's erroneous jury instructions (given twice to the jury over defendants objections) and the court's irrational and biased rulings as shown above, it is clear that Schiff was convicted illegally, and is currently "being deprived (of) liberty (and) property, without (having had the) due process of law" contemplated by the 5th and 6th Amendments to the United States Constitution and as reflected in all of the slogans and aphorisms that adorn all of America's court houses.
WHEREFORE, if the rule of law, constitutional rights, and the American standard of justice is to play any role in the consideration of this appeal, this Honorable Court will reverse each and every count of the Defendant's conviction, including the one year imposed on him by the court for contempt.
Respectfully submitted Dated February 22, 2007 _________________________ Irwin A. Schiff, Pro PersonaFOOTNOTES[1] In Cairi and Fulton R.R. Co. v. Hect, 95 U.S. 170, the Supreme Court held: "As against the government the word 'shall' when used in statutes is to be construed as 'may'; unless a contrary intention is manifest." See also Fort Howard Paper Co. v. Fox River Heights Dit., 26 NW 2nd 661; Ballow v. Kemp 92 F2d 556; Gow v. Consolidated Copermines Corp. 165 A1 136, and George Williams College v. Village of Williams Bay, 7 NW 2nd 6.
[2] The court had already barred Schiff from raising 7608 when he sought to cross-examine Special Agent Wethje who had to fall into the same subsection, but Schiff still doesn't have the transcript pages of his testimony.
[3] Defendant suggests that this tortured distinction was contrived to allow Government witnesses in tax trials to appear to be experts in something without their being able to be cross-examined on the tax laws and procedures they actually testify about on the grounds they are not "experts". a distinction the Government assumes the jury will soon forget.
[4] Therefore, Mr. Lowder's testimony, the Government's summation witness, was based upon: (1) his misunderstanding of the word "income"; and (2) the lack of statutory authority to perform the function about which he testified.