Monday, June 13, 2016

Case o' The Week: A Win Despite Murphy's Law - Murphy and Section 514 Jury Instructions

 Too bogus to fool the IRS, but real enough for conviction -- Murphy’s law is alive and well.
United States v. Murphy, 2016 WL 3201582 (9th Cir. June 9, 2016), decision available here.

Players: Decision by visiting District Sr. Judge Block, joined by Judges Clifton and Ikuta. Big win for former Federal Defenders of San Diego, Inc. AFD Ben Coleman, Coleman & Balogh LLP.

Facts: Murphy didn't pay his federal taxes. Id. at *1. After a number of inquiries by the IRS, Murphy contacted the agency with an offer to settle. Id. at *2. The offer - in peculiar legalese – was of four “bonded promissory notes.” Id. at *2. Wading through the dense language of the “notes,” it appears Murphy was offering to pay his taxes from the “secret accounts” held for U.S. sovereign citizens created after the U.S. left the gold standard. Id. at. *5 & n.1. Among other crimes, Murphy was charged with violating 18 USC § 514, fraudulently passing a false instrument purporting to be an actual security issued under the authority of the United States. Id. The jury was not instructed of the “under the authority” element, and found Murphy guilty. Id. at 4. The defense did not object to this instruction. Id. at *3.

Issue(s): “[Murphy] argues that the evidence was insufficient to support the § 514 convictions and, alternatively, that the district court erred by failing to instruct the jury on an element of that offense.” Id. at 4.

Held:Although the evidence that the ‘bonded promissory notes’ were issued under the authority of the United States is sufficient to avoid a judgment of acquittal, it is not sufficient to convince that the jury made the necessary finding, ….or that it would have done so had it been asked.” Id. at *6. (quotations and internal citations omitted). 

“We further conclude that we should exercise our discretion to correct the error. . . . Murphy was undeniably denied his constitutional right to have all of the elements of the crime submitted to the jury, while the government was concomitantly relieved of its obligation to prove very element beyond a reasonable doubt.” Id. (quotations and internal citations omitted).

Of Note: This is a welcome win on jury instructions challenges – with particular punch as a plain error reversal. It is interesting, however, that the Ninth did not bite on Murphy’s “sufficiency of evidence” challenge. Id. at 5. Can someone be convicted of offering fictitious instruments of the U.S., when the offered instruments are extraordinarily dubious “sovereign citizen” bonds – things that had no chance of actually conning the IRS? Yep. Even “bogus obligations that a prudent person might upon consideration be unlikely to accept as genuine” are criminalizes under this statute. Id. at 5 & n.1 (quotations and citation omitted).

How to Use: Scrambling to salvage the conviction, the government argued that §514 covers a wide array of fictitious instruments “and that Murphy was, at worse, convicted on a different theory of guilt than that charged in the indictment.” Id. at *6 & n.2. The Ninth is having none of it: switching theories of guilt from the indictment would be a fatal variance, and “((s)uch a conviction is just as constitutionally infirm as a conviction on fewer than all elements.” Id. “Fatal variances” are too often not as fatal as we'd like: look to footnote two as useful tool to pin the government down, and brush back attempts to resuscitate convictions through creative indictment interpretations.
For Further Reading: Is Johnson retroactive to the guidelines? Does guideline commentary (that does not interpret, and conflicts with the guidelines) somehow salvage the guidelines from Johnson attack? Our friend and Federal Defender Lisa Freeland has had these issues batting around the Supreme Court for months, in the Jones cert. petition. For an interesting description of the relist of Jones after last week’s Supreme Court conference (with a note of the recent and deepening split from the Fourth), see Relist Watch, available here

Steven Kalar, Federal Public Defender Northern District of California. Website at


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