Tuesday, July 22, 2008
THE TRUTH ABOUT SARS EFFICACY
69 270 audits
This in practical terms means, for a two man team of auditors to conduct 4 (100hr) audits per month, they had 2886 persons dedicated to this task. These audits would earn roughly R1,03bn in salaries, excluding bonuses!
R6,6bn was raised in revised assessments from these audits.
What does this mean? What the short form table of results (in their annual report published on the SARS web site) does not tell you, is that R6,6bn was not collected. That is what was merely assessed through revised assessments. For each R1 spent, they earned R6,6. What’s wrong with that? You ask! Well, a little closer look at the following scant numbers published by SARS, prints the following picture. SARS collected 3.75% of its debt (R17,7bn collected) which we presume is mainly revised assessments (or the like), which is the same type of assessments’ as the R6,6bn – not collected yet. Except for that small 3.75%.
That tells us that 96,25% of the revised assessment debt due to them is bad, or potentially bad. Remember only 3.75% has been collected! Now applying this logic through to the boasted about R6,6bn assessments that their close to 70 000 audits have earned, means that only R247,5m is probably collectable (out of the total R6,6bn). Against a cost of just over R1bn! That’s not good business. They are spending over R1bn to collect R247,5m!
We don’t know all the reasons why 96,25% is not collected of the debt due to SARS, but guesses are out there that a lot of it is improper and hasty audits, giving rise to ‘funny’ numbers for SARS, which are simply not collectable.
Turning to their heightened criminal prosecutions. We see similar statistics emerging. 447 guilty verdicts out of 1909 prosecutions. That is a success factor of only 23,4%. The worst part of it is that 1462 individuals had to be dragged through the shameful process of criminal prosecution. Have you ever witnessed the criminal prosecution of a person? It’s not a nice experience, even if you are not convicted.
These statistics are horrendous. And show a lack of respect and application of Constitutional principles in SARS exercising their important duty of administering tax law and not merely being a monetary hitman!
When will someone start recognising the clear trend that is developing within SARS management, and demand that some of these questions be answered and prove, beyond a reasonable doubt, that my simple analysis is wrong!
Taking this to a positive conclusion for SARS. In light of the obvious bad business sense that prevails in its methodology in audits, they would be better of settling along the lines about to be proposed. Lets recap:
1. Of the R6,6bn, only R250m (rounded up) is collectable;
2. That translates to R3650 per taxpayer audited;
3. Each audit costs R15 000.
If SARS settles all its audits by simply asking for payment of an extra R18 650 from each audited taxpayer it would achieve two things:
1. It will be R15 000 better off per audit, covering its costs (which is not the case now);
2. It would be saving the taxpayer huge sums in tax advisor fees, justifying the R18 650 payment.
In fact, if Mr Gordhan really wanted to stretch the boundaries of being taxman entrepreneur of the decade, he should take his randomness technique of selecting taxpayers for audits, extract 70 000 taxpayers for audit and do the following:
1. Offer them the option of paying R18 650, no questions asked (like an insurance fee) and face no audit;
2. Save R15 000 out of the R18 650 (because he doesn’t need the SARS auditors to do anything);
3. Only audit those who justifiably should be audited after proper investigation;
The effect will be threefold:
1. An extra pot of tax guarantee money for less harassed taxpayers;
2. Less SARS auditors to pay, who are not turning out to be profitable;
3. More successful and focussed audits catching the real tax crooks – not chasing after political agenda’s and slanted random audits (like the one that will be planned against me after publishing this article!)
Watch this space!
Monday, July 21, 2008
Probability Theory, Law, Evidence and Tax Risk - SOX 404 and FIN 48 - People v Collins
THE PEOPLE, PLAINTIFF AND RESPONDENT v. MALCOLM RICARDO COLLINS, DEFENDANT AND APPELLANT Docket No. Crim. 11176 Supreme Court of California In Bank March 11, 1968 68 Cal. 2d 319, 438 P.2d 33, 66 Cal.Rptr. 497 (1968)
APPEAL from a judgment of the Superior Court of Los Angeles County. Maurice C. Sparling, Judge. Reversed. Rex K. DeGeorge, under appointment by the Supreme Court, for Defendant and Appellant. Thomas C. Lynch, Attorney General, William E. James, Assistant Attorney General, and Nicholas C. Yost, Deputy Attorney General, for Plaintiff and Respondent. SULLIVAN, J.
We deal here with the novel question whether evidence of mathematical probability has been properly introduced and used by the prosecution in a criminal case. While we discern no inherent incompatibility between the disciplines of law and mathematics and intend no general disapproval or disparagement of the latter as an auxiliary in the fact-finding processes of the former, we cannot uphold the technique employed in the instant case.
As we explain in detail, infra, the testimony as to mathematical probability infected the case with fatal error and distorted the jury's traditional role of determining guilt or innocence according to long-settled rules. Mathematics, a veritable sorcerer in our computerized society, while assisting the trier of fact in the search for truth, must not cast a spell over him. We conclude that on the record before us defendant should not have had his guilt determined by the odds and that he is entitled to a new trial.
We reverse the judgment. A jury found defendant Malcolm Ricardo Collins and his wife defendant Janet Louise Collins guilty of second degree robbery (Pen. Code, §§ 211 Penal, 211a, 1157). Malcolm appeals from the judgment of conviction. Janet has not appealed.1
On June 18, 1964, about 11:30 a.m. Mrs. Juanita Brooks, who had been shopping, was walking home along an alley in the San Pedro area of the City of Los Angeles. She was pulling behind her a wicker basket carryall containing groceries and had her purse on top of the packages. She was using a cane. As she stooped down to pick up an empty carton, she was suddenly pushed to the ground by a person whom she neither saw nor heard approach. She was stunned by the fall and felt some pain. She managed to look up and saw a young woman running from the scene.
According to Mrs. Brooks the latter appeared to weigh about 145 pounds, was wearing "something dark," and had hair "between a dark blond and a light blond," but lighter than the color of defendant Janet Collins' hair as it appeared at trial. Immediately after the incident, Mrs. Brooks discovered that her purse, containing between $35 and $40 was missing.
About the same time as the robbery, John Bass, who lived on the street at the end of the alley, was in front of his house watering his lawn. His attention was attracted by "a lot of crying and screaming" coming from the alley. As he looked in that direction, he saw a woman run out of the alley and enter a yellow automobile parked across the street from him. He was unable to give the make of the car. The car started off immediately and pulled wide around another parked vehicle so that in the narrow street it passed within 6 feet of Bass. The latter then saw that it was being driven by a male Negro, wearing a mustache and beard.
At the trial Bass identified defendant as the driver of the yellow automobile. However, an attempt was made to impeach his identification by his admission that at the preliminary hearing he testified to an uncertain identification at the police lineup shortly after the attack on Mrs. Brooks, when defendant was beardless. In his testimony Bass described the woman who ran from the alley as a Caucasian, slightly over 5 feet tall, of ordinary build, with her hair in a dark blonde ponytail, and wearing dark clothing. He further testified that her ponytail was "just like" one which Janet had in a police photograph taken on June 22, 1964.
On the day of the robbery, Janet was employed as a housemaid in San Pedro. Her employer testified that she had arrived for work at 8:50 a.m. and that defendant had picked her up in a light yellow car2 about 11:30 a.m. On that day, according to the witness, Janet was wearing her hair in a blonde ponytail but lighter in color than it appeared at trial.3 There was evidence from which it could be inferred that defendants had ample time to drive from Janet's place of employment and participate in the robbery. Defendants testified, however, that they went directly from her employer's house to the home of friends, where they remained for several hours.
In the morning of June 22, Los Angeles Police Officer Kinsey, who was investigating the robbery, went to defendants' home. He saw a yellow Lincoln automobile with an off-white top in front of the house. He talked with defendants. Janet, whose hair appeared to be a dark blonde, was wearing it in a ponytail. Malcolm did not have a beard. The officer explained to them that he was investigating a robbery specifying the time and place; that the victim had been knocked down and her purse snatched; and that the person responsible was a female Caucasian with blonde hair in a ponytail who had left the scene in a yellow car driven by a male Negro.
He requested that defendants accompany him to the police station at San Pedro and they did so. There, in response to police inquiries as to defendants' activities at the time of the robbery, Janet stated, according to Officer Kinsey, that her husband had picked her up at her place of employment at 1 p.m. and that they had then visited at the home of friends in Los Angeles. Malcolm confirmed this. Defendants were detained for an hour or two, were photographed but not booked, and were eventually released and driven home by the police.
Late in the afternoon of the same day, Officer Kinsey, while driving home from work in his own car, saw defendants riding in their yellow Lincoln. Although the transcript fails to disclose what prompted such action, Kinsey proceeded to place them under surveillance and eventually followed them home. He called for assistance and arranged to meet other police officers in the vicinity of defendants' home. Kinsey took a position in the rear of the premises. The other officers, who were in uniform and had arrived in a marked police car, approached defendants' front door.
As they did so, Kinsey saw defendant Malcolm Collins run out the back door toward a rear fence and disappear behind a tree. Meanwhile the other officers emerged with Janet Collins whom they had placed under arrest. A search was made for Malcolm who was found in a closet of a neighboring home and also arrested. Defendants were again taken to the police station, were kept in custody for 48 hours, and were again released without any charges being made against them.
Officer Kinsey interrogated defendants separately on June 23 while they were in custody and testified to their statements over defense counsel's objections based on the decision in Escobedo and our first decision in Dorado.4 According to the officer, Malcolm stated that he sometimes wore a beard but that he did not wear a beard on June 18 (the day of the robbery), having shaved it off on June 2, 1964.5
He also explained two receipts for traffic fines totalling $35 paid on June 19, which receipts had been found on his person, by saying that he used funds won in a gambling game at a labor hall. Janet, on the other hand, said that the $35 used to pay the fines had come from her earnings.6 On July 9, 1964, defendants were again arrested and were booked for the first time. While they were in custody and awaiting the preliminary hearing, Janet requested to talk with Officer Kinsey. There followed a lengthy conversation during the first part of which Malcolm was not present.
During this time Janet expressed concern about defendant and inquired as to what the outcome would be if it appeared that she committed the crime and Malcolm knew nothing about it. In general she indicated a wish that defendant be released from any charges because of his prior criminal record and that if someone must be held responsible, she alone would bear the guilt. The officer told her that no assurances could be given, that if she wanted to admit responsibility disposition of the matter would be in the hands of the court and that if she committed the crime and defendant knew nothing about it the only way she could help him would be by telling the truth.
Defendant was then brought into the room and participated in the rest of the conversation. The officer asked to hear defendant's version of the matter, saying that he believed defendant was at the scene. However, neither Janet nor defendant confessed or expressly made damaging admissions although constantly urged by the investigating officer to make truthful statements. On several occasions defendant denied that he knew what had gone on in the alley. On the other hand, the whole tone of the conversation evidenced a strong consciousness of guilt on the part of both defendants who appeared to be seeking the most advantageous way out.
Over defense counsel's same objections based on Escobedo and Dorado, some parts of the foregoing conversation were testified to by Officer Kinsey and in addition a tape recording of the entire conversation was introduced in evidence and played to the jury.7 At the seven-day trial the prosecution experienced some difficulty in establishing the identities of the perpetrators of the crime. The victim could not identify Janet and had never seen defendant.
The identification by the witness Bass, who observed the girl run out of the alley and get into the automobile, was incomplete as to Janet and may have been weakened as to defendant. There was also evidence, introduced by the defense, that Janet had worn light-colored clothing on the day in question, but both the victim and Bass testified that the girl they observed had worn dark clothing. In an apparent attempt to bolster the identifications, the prosecutor called an instructor of mathematics at a state college. Through this witness he sought to establish that, assuming the robbery was committed by a Caucasian woman with a blond ponytail who left the scene accompanied by a Negro with a beard and mustache, there was an overwhelming probability that the crime was committed by any couple answering such distinctive characteristics.
The witness testified, in substance, to the "product rule," which states that the probability of the joint occurrence of a number of mutually independent events is equal to the product of the individual probabilities that each of the events will occur. Without presenting any statistical evidence whatsoever in support of the probabilities for the factors selected, the prosecutor then proceeded to have the witness assume probability factors for the various characteristics which he deemed to be shared by the guilty couple and all other couples answering to such distinctive characteristics.
Applying the product rule to his own factors the prosecutor arrived at a probability that there was but one chance in 12 million that any couple possessed the distinctive characteristics of the defendants. Accordingly, under this theory, it was to be inferred that there could be but one chance in 12 million that defendants were innocent and that another equally distinctive couple actually committed the robbery. Expanding on what he had thus purported to suggest as a hypothesis, the prosecutor offered the completely unfounded and improper testimonial assertion that, in his opinion, the factors he had assigned were "conservative estimates" and that, in reality, "the chances of anyone else besides these defendants being there, . . . having every similarity, . . . is something like one in a billion."
Objections were timely made to the mathematician's testimony on the grounds that it was immaterial, that it invaded the province of the jury, and that it was based on unfounded assumptions. The objections were "temporarily overruled" and the evidence admitted subject to a motion to strike. When that motion was made at the conclusion of the direct examination, the court denied it, stating that the testimony had been received only for the "purpose of illustrating the mathematical probabilities of various matters, the possibilities for them occurring or re-occurring."
Both defendants took the stand in their own behalf. They denied any knowledge of or participation in the crime and stated that after Malcolm called for Janet at her employer's house they went directly to a friend's house in Los Angeles where they remained for some time. According to this testimony defendants were not near the scene of the robbery when it occurred. Defendants' friend testified to a visit by them "in the middle of June" although she could not recall the precise date. Janet further testified that certain inducements were held out to her during the July 9 interrogation on condition that she confess her participation.
Defendant makes two basic contentions before us: First, that the admission in evidence of the statements made by defendants while in custody on June 23 and July 9, 1964, constitutes reversible error under the rules announced in the Escobedo and Dorado decisions;11 and second, that the introduction of evidence pertaining to the mathematical theory of probability and the use of the same by the prosecution during the trial was error prejudicial to defendant.
We consider the latter claim first. As we shall explain, the prosecution's introduction and use of mathematical probability statistics injected two fundamental prejudicial errors into the case:
(1) The testimony itself lacked an adequate foundation both in evidence and in statistical theory; and
(2) the testimony and the manner in which the prosecution used it distracted the jury from its proper and requisite function of weighing the evidence on the issue of guilt, encouraged the jurors to rely upon an engaging but logically irrelevant expert demonstration, foreclosed the possibility of an effective defense by an attorney apparently unschooled in mathematical refinements, and placed the jurors and defense counsel at a disadvantage in sifting relevant fact from inapplicable theory.
We initially consider the defects in the testimony itself. As we have indicated, the specific technique presented through the mathematician's testimony and advanced by the prosecutor to measure the probabilities in question suffered from two basic and pervasive defects — an inadequate evidentiary foundation and an inadequate proof of statistical independence.
First, as to the foundational requirement, we find the record devoid of any evidence relating to any of the six individual probability factors used by the prosecutor and ascribed by him to the six characteristics as we have set them out in footnote 10, ante.
To put it another way, the prosecution produced no evidence whatsoever showing, or from which it could be in any way inferred, that only one out of every ten cars which might have been at the scene of the robbery was partly yellow, that only one out of every four men who might have been there wore a mustache, that only one out of every ten girls who might have been there wore a ponytail, or that any of the other individual probability factors listed were even roughly accurate.12
The bare, inescapable fact is that the prosecution made no attempt to offer any such evidence. Instead, through leading questions having perfunctorily elicited from the witness the response that the latter could not assign a probability factor for the characteristics involved,13 the prosecutor himself suggested what the various probabilities should be and these became the basis of the witness' testimony (see fn. 10, ante).
It is a curious circumstance of this adventure in proof that the prosecutor not only made his own assertions of these factors in the hope that they were "conservative" but also in later argument to the jury invited the jurors to substitute their "estimates" should they wish to do so. We can hardly conceive of a more fatal gap in the prosecution's scheme of proof.
A foundation for the admissibility of the witness' testimony was never even attempted to be laid, let alone established. His testimony was neither made to rest on his own testimonial knowledge nor presented by proper hypothetical questions based upon valid data in the record. (See generally: 2 Wigmore on Evidence (3d ed. 1940) §§ 478, 650-652, 657, 659, 672-684; Witkin, Cal. Evidence (2d ed. 1966) § 771; McCormick on Evidence, pp. 19-20; Evidence: Admission of Mathematical Probability Statistics Held Erroneous for Want of Demonstration of Validity (1967) Duke L.J. 665, 675-678, citing People v. Risley (1915) 214 N.Y. 75, 85 [108 N.E. 200, Ann. Cas. 1916 D 775]; State v. Sneed (1966) 76 N.M. 349 [414 P.2d 858].)
In the Sneed case, the court reversed a conviction based on probabilistic evidence, stating: "We hold that mathematical odds are not admissible as evidence to identify a defendant in a criminal proceeding so long as the odds are based on estimates, the validity of which have [sic] not been demonstrated." (Italics added.) (414 P.2d at p. 862.) But, as we have indicated, there was another glaring defect in the prosecution's technique, namely an inadequate proof of the statistical independence of the six factors.
No proof was presented that the characteristics selected were mutually independent, even though the witness himself acknowledged that such condition was essential to the proper application of the "product rule" or "multiplication rule." (See Note, supra, Duke L.J. 665, 669-670, fn. 25.)14 To the extent that the traits or characteristics were not mutually independent (e.g., Negroes with beards and men with mustaches obviously represent overlapping categories15), the "product rule" would inevitably yield a wholly erroneous and exaggerated result even if all of the individual components had been determined with precision. (Siegel, Nonparametric Statistics for the Behavioral Sciences (1956) 19; see generally Harmon, Modern Factor Analysis (1960).)
In the instant case, therefore, because of the aforementioned two defects — the inadequate evidentiary foundation and the inadequate proof of statistical independence — the technique employed by the prosecutor could only lead to wild conjecture without demonstrated relevancy to the issues presented. It acquired no redeeming quality from the prosecutor's statement that it was being used only "for illustrative purposes" since, as we shall point out, the prosecutor's subsequent utilization of the mathematical testimony was not confined within such limits.
We now turn to the second fundamental error caused by the probability testimony. Quite apart from our foregoing objections to the specific technique employed by the prosecution to estimate the probability in question, we think that the entire enterprise upon which the prosecution embarked, and which was directed to the objective of measuring the likelihood of a random couple possessing the characteristics allegedly distinguishing the robbers, was gravely misguided. At best, it might yield an estimate as to how infrequently bearded Negroes drive yellow cars in the company of blonde females with ponytails.
The prosecution's approach, however, could furnish the jury with absolutely no guidance on the crucial issue: Of the admittedly few such couples, which one, if any, was guilty of committing this robbery? Probability theory necessarily remains silent on that question, since no mathematical equation can prove beyond a reasonable doubt (1) that the guilty couple in fact possessed the characteristics described by the People's witnesses, or even (2) that only one couple possessing those distinctive characteristics could be found in the entire Los Angeles area.
As to the first inherent failing we observe that the prosecution's theory of probability rested on the assumption that the witnesses called by the People had conclusively established that the guilty couple possessed the precise characteristics relied upon by the prosecution. But no mathematical formula could ever establish beyond a reasonable doubt that the prosecution's witnesses correctly observed and accurately described the distinctive features which were employed to link defendants to the crime. (See 2 Wigmore on Evidence (3d ed. 1940) § 478.)
Conceivably, for example, the guilty couple might have included a light-skinned Negress with bleached hair rather than a Caucasian blonde; or the driver of the car might have been wearing a false beard as a disguise; or the prosecution's witnesses might simply have been unreliable.16 The foregoing risks of error permeate the prosecution's circumstantial case. Traditionally, the jury weighs such risks in evaluating the credibility and probative value of trial testimony, but the likelihood of human error or of falsification obviously cannot be quantified; that likelihood must therefore be excluded from any effort to assign a number to the probability of guilt or innocence.
Confronted with an equation which purports to yield a numerical index of probable guilt, few juries could resist the temptation to accord disproportionate weight to that index; only an exceptional juror, and indeed only a defense attorney schooled in mathematics, could successfully keep in mind the fact that the probability computed by the prosecution can represent, at best, the likelihood that a random couple would share the characteristics testified to by the People's witnesses — not necessarily the characteristics of the actually guilty couple.
As to the second inherent failing in the prosecution's approach, even assuming that the first failing could be discounted, the most a mathematical computation could ever yield would be a measure of the probability that a random couple would possess the distinctive features in question. In the present case, for example, the prosecution attempted to compute the probability that a random couple would include a bearded Negro, a blonde girl with a ponytail, and a partly yellow car; the prosecution urged that this probability was no more than one in 12 million.
Even accepting this conclusion as arithmetically accurate, however, one still could not conclude that the Collinses were probably the guilty couple. On the contrary, as we explain in the Appendix, the prosecution's figures actually imply a likelihood of over 40 percent that the Collinses could be "duplicated" by at least one other couple who might equally have committed the San Pedro robbery. Urging that the Collinses be convicted on the basis of evidence which logically establishes no more than this seems as indefensible as arguing for the conviction of X on the ground that a witness saw either X or X's twin commit the crime.
Again, few defense attorneys, and certainly few jurors, could be expected to comprehend this basic flaw in the prosecution's analysis. Conceivably even the prosecutor erroneously believed that his equation established a high probability that no other bearded Negro in the Los Angeles area drove a yellow car accompanied by a ponytailed blonde. In any event, although his technique could demonstrate no such thing, he solemnly told the jury that he had supplied mathematical proof of guilt. Sensing the novelty of that notion, the prosecutor told the jurors that the traditional idea of proof beyond a reasonable doubt represented "the most hackneyed, stereotyped, trite, misunderstood concept in criminal law."
He sought to reconcile the jury to the risk that, under his "new math" approach to criminal jurisprudence, "on some rare occasion . . . an innocent person may be convicted." "Without taking that risk," the prosecution continued, "life would be intolerable . . . because . . . there would be immunity for the Collinses, for people who chose not to be employed to go down and push old ladies down and take their money and be immune because how could we ever be sure they are the ones who did it?"
In essence this argument of the prosecutor was calculated to persuade the jury to convict defendants whether or not they were convinced of their guilt to a moral certainty and beyond a reasonable doubt. (Pen. Code, § 1096 Penal.) Undoubtedly the jurors were unduly impressed by the mystique of the mathematical demonstration but were unable to assess its relevancy or value.
Although we make no appraisal of the proper applications of mathematical techniques in the proof of facts (see People v. Jordan (1955) 45 Cal.2d 697, 707 [290 P.2d 484]; People v. Trujillo (1948) 32 Cal.2d 105, 109 [194 P.2d 681]; in a slightly differing context see Whitus v. Georgia (1967) 385 U.S. 545, 552, fn. 2 [17 L.Ed.2d 599, 604, 87 S.Ct. 643]; Finkelstein, The Application of Statistical Decision Theory to the Jury Discrimination Cases (1966) 80 Harv.L.Rev. 338, 338-340), we have strong feelings that such applications, particularly in a criminal case, must be critically examined in view of the substantial unfairness to a defendant which may result from ill conceived techniques with which the trier of fact is not technically equipped to cope. (See State v. Sneed, supra, 414 P.2d 858; Note, supra, Duke L.J. 665.)
We feel that the technique employed in the case before us falls into the latter category. We conclude that the court erred in admitting over defendant's objection the evidence pertaining to the mathematical theory of probability and in denying defendant's motion to strike such evidence. The case was apparently a close one.
The jury began its deliberations at 2:46 p.m. on November 24, 1964, and retired for the night at 7:46 p.m.; the parties stipulated that a juror could be excused for illness and that a verdict could be reached by the remaining 11 jurors; the jury resumed deliberations the next morning at 8:40 a.m. and returned verdicts at 11:58 a.m. after five ballots had been taken. In the light of the closeness of the case, which as we have said was a circumstantial one, there is a reasonable likelihood that the result would have been more favorable to defendant if the prosecution had not urged the jury to render a probabilistic verdict.
In any event, we think that under the circumstances the "trial by mathematics" so distorted the role of the jury and so disadvantaged counsel for the defense, as to constitute in itself a miscarriage of justice. After an examination of the entire cause, including the evidence, we are of the opinion that it is reasonably probable that a result more favorable to defendant would have been reached in the absence of the above error. (People v. Watson (1956) 46 Cal.2d 818, 836 [299 P.2d 243].)
The judgment against defendant must therefore be reversed. In view of the foregoing conclusion, we deem it unnecessary to consider whether the admission of defendants' extrajudicial statements constitutes error under the rules announced in Escobedo and Dorado. Upon retrial, the admissibility of these or any other extrajudicial statements sought to be introduced by the prosecution must be determined in the light of the rules set forth in Miranda v. Arizona (1966) 384 U.S. 436 [16 L.Ed.2d 694, 86 S.Ct. 1602, 10 A.L.R.3d 974]. (People v. Doherty (1967) 67 Cal.2d 9, 12, 17-21 [59 Cal.Rptr. 857, 429 P.2d 177].)
As we have pointed out, the trial herein took place between our first and second Dorado decisions (see fn. 4, ante). Although defense counsel was commendably alert in basing objections to the admission of the statements upon the decisions in Escobedo and Dorado, he of course did not have the benefit of our numerous decisions beginning with the second Dorado decision expounding various facets of the exclusionary rule.
In the event any extrajudicial statements made by defendant are offered in evidence on retrial, the parties will have an opportunity to make a record on pertinent issues subject to prior determination by the court in the light of Miranda rules before such statements are received in evidence. It would be fruitless for us to essay such a task at this point when such record does not yet exist.
The judgment is reversed. Traynor, C.J., Peters, J., Tobriner, J., Mosk, J., and Burke, J., concurred. McCOMB, J. I dissent. I would affirm the judgment in its entirety. APPENDIX If "Pr" represents the probability that a certain distinctive combination of characteristics, hereinafter designated "C," will occur jointly in a random couple, then the probability that C will not occur in a random couple is (1 — Pr).
Applying the product rule (see fn. 8, ante), the probability that C will occur in none of N couples chosen at random is (1 - Pr)[N], so that the probability of C occurring in at least one of N random couples is [1 - (1 - Pr)[N]]. Given a particular couple selected from a random set of N, the probability of C occurring in that couple (i.e., Pr), multiplied by the probability of C occurring in none of the remaining N - 1 couples (i.e., (1 - Pr)[N - 1]), yields the probability that C will occur in the selected couple and in no other. Thus the probability of C occurring in any particular couple, and in that couple alone, is [(Pr) X (1 - Pr)[N - 1]].
Since this is true for each of the N couples, the probability that C will occur in precisely one of the N couples, without regard to which one, is [(Pr) X (1 - Pr)[N - 1]] added N times, because the probability of the occurrence of one of several mutually exclusive events is equal to the sum of the individual probabilities. Thus the probability of C occurring in exactly one of N random couples (any one, but only one) is [(N) X (Pr) X (1 - Pr)[N - 1]].
By subtracting the probability that C will occur in exactly one couple from the probability that C will occur in at least one couple, one obtains the probability that C will occur in more than one couple: [1 - (1 - Pr)[N]] - [(N) X (Pr) X (1 - Pr)[N - 1]]. Dividing this difference by the probability that C will occur in at least one couple (i.e., dividing the difference by [1 - (1 - Pr)[N]]) then yields the probability that C will occur more than once in a group of N couples in which C occurs at least once.
Turning to the case in which C represents the characteristics which distinguish a bearded Negro accompanied by a ponytailed blonde in a yellow car, the prosecution sought to establish that the probability of C occurring in a random couple was 1/12,000,000 — i.e., that Pr = 1/12,000,000. Treating this conclusion as accurate, it follows that, in a population of N random couples, the probability of C occurring exactly once is [(N) X (1/12,000,000) X (1 - 1/12,000,000)[N - 1]]. Subtracting this product from [1 - (1 - 1/12,000,000)[N]], the probability of C occurring in at least one couple, and dividing the resulting difference by [1 - (1 - 1/12,000,000)[N]], the probability that C will occur in at least one couple, yields the probability that C will occur more than once in a group of N random couples of which at least one couple (namely, the one seen by the witnesses) possesses characteristics C.
In other words, the probability of another such couple in a population of N is the quotient A/B, where A designates the numerator [1 - (1 - 1/12,000,000)[N]] - [(N) X (1/12,000,000) X (1 - 1/12,000,000)[N - 1]], and B designates the denominator [1 - (1 - 1/12,000,000)[N]]. N, which represents the total number of all couples who might conceivably have been at the scene of the San Pedro robbery, is not determinable, a fact which suggests yet another basic difficulty with the use of probability theory in establishing identity.
One of the imponderables in determining N may well be the number of N-type couples in which a single person may participate. Such considerations make it evident that N, in the area adjoining the robbery, is in excess of several million; as N assumes values of such magnitude, the quotient A/B computed as above, representing the probability of a second couple as distinctive as the one described by the prosecution's witnesses, soon exceeds 4/10. Indeed, as N approaches 12 million, this probability quotient rises to approximately 41 percent.
We note parenthetically that if 1/N = Pr, then as N increases indefinitely, the quotient in question approaches a limit of (e - 2)/(e - 1), where "e" represents the transcendental number (approximately 2.71828) familiar in mathematics and physics. Hence, even if we should accept the prosecution's figures without question, we would derive a probability of over 40 percent that the couple observed by the witnesses could be "duplicated" by at least one other equally distinctive interracial couple in the area, including a Negro with a beard and mustache, driving a partly yellow car in the company of a blonde with a ponytail.
Thus the prosecution's computations, far from establishing beyond a reasonable doubt that the Collinses were the couple described by the prosecution's witnesses, imply a very substantial likelihood that the area contained more than one such couple, and that a couple other than the Collinses was the one observed at the scene of the robbery. (See generally: Hoel, Introduction to Mathematical Statistics (3d ed. 1962); Hodges & Leymann, Basic Concepts of Probability and Statistics (1964); Lindgren & McElrath, Introduction to Probability and Statistics (1959).) 1 Hereafter, the term "defendant" is intended to apply only to Malcolm, but the term "defendants" to Malcolm and Janet. 2 Other witnesses variously described the car as yellow, as yellow with an off-white top, and yellow with an egg-shell white top. The car was also described as being medium to large in size.
Defendant drove a car at or near the times in question which was a Lincoln with a yellow body and a white top. 3 There are inferences which may be drawn from the evidence that Janet attempted to alter the appearance of her hair after June 18. Janet denies that she cut, colored or bleached her hair at any time after June 18, and a number of witnesses supported her testimony. 4 Escobedo v. Illinois (378 U.S. 478 [12 L.Ed.2d 977, 84 S.Ct. 1758]) was decided on June 22, 1964, four days after the robbery. The investigation was carried on both before and after Escobedo but before our first decision in People v. Dorado filed on August 31, 1964. Defendants' trial took place in November 1964 after we granted a rehearing in Dorado on September 24, 1964, but before our decision on rehearing filed January 29, 1965. (62 Cal.2d 338 [42 Cal.Rptr. 169, 398 P.2d 361].) 5 Evidence as to defendant's beard and mustache is conflicting.
Defense witnesses appeared to support defendant's claims that he had shaved his beard on June 2. There was testimony that on June 19 when defendant appeared in court to pay fines on another matter he was bearded. By June 22 the beard had been removed. 6 The source of the $35, being essentially the same amount as the $35 to $40 reported by the victim as having been in her purse when taken from her the day before the fines were paid, was a significant factor in the prosecution's case.
Other evidence disclosed that defendant and Janet were married June 2, 1964, at which time they had only $12, a portion of which was spent on a trip to Tiajuana. Since the marriage defendant had not worked, and Janet's earnings were not more than $12 a week, if that much. 7 Included in the conversation are the following excerpts from Janet's statements: "If I told you that he didn't know anything about it and I did it, would you cut him loose?" "I just want him out, that's all, because I ain't never been in no trouble. I won't have to do too much [time], but he will." "What's the most time I can do?" "Would it be easier if I went ahead and said, if I was going to say anything, say it now instead of waiting till court time?"
Defendant indicated that he should "go and have trust in [the officer], but maybe I'd be wrong. I mean, this is a little delicate on my behalf." At another point defendant stated: "I'm leaving it up to her." Defendant expressed concern during the conversation that any statement by Janet would not necessarily relieve him because he admittedly had been with her all that day since 11:30 a.m. The conversation closed when defendants indicated that they wished more time to think it over. 8 In the example employed for illustrative purposes at the trial, the probability of rolling one die and coming up with a "2" is 1/6, that is, any one of the six faces of a die has one chance in six of landing face up on any particular roll.
The probability of rolling two "2's" in succession is 1/6 X 1/6, or 1/36, that is, on only one occasion out of 36 double rolls (or the roll of two dice), will the selected number land face up on each roll or die. 9 His argument to the jury was based on the same gratuitous assumptions or on similar assumptions which he invited the jury to make. 10 Although the prosecutor insisted that the factors he used were only for illustrative purposes — to demonstrate how the probability of the occurrence of mutually independent factors affected the probability that they would occur together — he nevertheless attempted to use factors which he personally related to the distinctive characteristics of defendants.
In his argument to the jury he invited the jurors to apply their own factors, and asked defense counsel to suggest what the latter would deem as reasonable. The prosecutor himself proposed the individual probabilities set out in the table below. Although the transcript of the examination of the mathematics instructor and the information volunteered by the prosecutor at that time create some uncertainty as to precisely which of the characteristics the prosecutor assigned to the individual probabilities, he restated in his argument to the jury that they should be as follows: Characteristic Individual Probability A.
Partly yellow automobile 1/10 B. Man with mustache 1/4 C. Girl with ponytail 1/10 D. Girl with blond hair 1/3 E. Negro man with beard 1/10 F. Interracial couple in car 1/1000 In his brief on appeal defendant agrees that the foregoing appeared on a table presented in the trial court. 11 Escobedo v. Illinois (1964) 378 U.S. 478 [12 L.Ed.2d 977, 84 S.Ct. 1758]; People v. Dorado (1965) 62 Cal.2d 338 [42 Cal.Rptr. 169, 398 P.2d 361]. 12 We seriously doubt that such evidence could ever be compiled since no statistician could possibly determine after the fact which cars, or which individuals, "might" have been present at the scene of the robbery; certainly there is no reason to suppose that the human and automotive populations of San Pedro, California, include all potential culprits — or, conversely, that all members of these populations are proper candidates for inclusion.
Thus the sample from which the relevant probabilities would have to be derived is itself undeterminable. (See generally, Yamane, Statistics, An Introductory Analysis (1964), ch. I.) 13 The prosecutor asked the mathematics instructor: "Now, let me see if you can be of some help to us with some independent factors, and you have some paper you may use. Your specialty does not equip you, I suppose, to give us some probability of such things as a yellow car as contrasted with any other kind of car, does it? . . . I appreciate the fact that you can't assign a probability for a car being yellow as contrasted to some other car, can you? A. No, I couldn't." 14 It is there stated that: "A trait is said to be independent of a second trait when the occurrence or nonoccurrence of one does not affect the probability of the occurrence of the other trait.
The multiplication rule cannot be used without some degree of error where the traits are not independent." (Citing Huntsberger, Elements of Statistical Inference (1961) 77; Kingston & Kirk, The Use of Statistics in Criminalistics (1964) 55 J. Crim. L., C. & P.S. 516.) (Note, supra, Duke L.J. fn. 25, p. 670.) 15 Assuming arguendo that factors B and E (see fn. 10, ante), were correctly estimated. nevertheless it is still arguable that most Negro men with beards also have mustaches (exhibit 3 herein, for instance, shows defendant with both a mustache and a beard, indeed in a hirsute continuum); if so, there is no basis for multiplying 1/4 by 1/10 to estimate the proportion of Negroes who wear beards and mustaches.
Again, the prosecution's technique could never be meaningfully applied, since its accurate use would call for information as to the degree of interdependence among the six individual factors. (See Yamane, op. cit. supra.) Such information cannot be compiled, however, since the relevant sample necessarily remains unknown. (See fn. 10, ante.) 16 In the instant case, for instance, the victim could not state whether the girl had a ponytail, although the victim observed the girl as she ran away.
The witness Bass, on the other hand, was sure that the girl whom he saw had a ponytail. The demonstration engaged in by the prosecutor also leaves no room for the possibility, although perhaps a small one, that the girl whom the victim and the witness observed was, in fact, the same girl.
Legal & Finance: Special Guide to Combat Tax Risks
Legal & Finance: Special Guide to Combat Tax Risks.
Tax risk management must become a priority for businesses operating in today's economic climate, according to accountants PricewaterhouseCoopers. And to help companies understand the issues it has launched a special guide which takes a detailed look at the different types of threat and how to combat them.
Dave Moore, head of tax in the Midlands at PwC, said: 'Every company has a responsibility to pay the appropriate taxes, but this doesn't mean that tax is risk free - quite the opposite. 'The financial risks are often very considerable. For example, a multi-national group that cannot demonstrate to tax authorities around the world that its intra-group pricing is at arms length can be running a very large global financial exposure. Increasingly, there is also a danger that a company's public reputation may be damaged if its tax risks are not appropriately managed.'
A recent survey by the firm showed that while large companies are thinking seriously about tax risk, they still need to be more diligent about documenting procedures. Mr Moore said: 'Few tax functions actually have a documented tax risk management policy, though we are starting to see tax risk managers being appointed and this is something they will undoubtedly be addressing. 'Risk management has not historically been on the agenda for many tax functions.
While some of the tax risks will have been managed, we suspect few people will claim that they have all been managed in a systematic way. 'Even where it has, a lot of information about these issues is carried around in people's heads and if these people leave the organisation then the information leaves them. In today's post-Enron environment, companies leave themselves exposed if they do not properly identify and consider all areas of risk facing the business. 'Effective tax risk management means ensuring that tax risks are identified, regularly reviewed and monitored.
Many companies now insist that an internal or external tax specialist must be consulted on all transactions over a certain value. Companies should assess their overall portfolio of tax risk, and be confident that it is appropriate for them and their shareholders.'
The guide addresses a number of key issues, including the formation of a specific policy and approach, the provision of a management framework and the specific tools and techniques that can be employed. Mr Moore said: 'The board has to be the starting point for an effective tax risk management policy.
I would expect to see high level oversight and review of such policy. 'The audit committee should also ensure that appropriate control framework is in place as well as keeping a close eye on reputational risk. The CFO or head of tax would then carry out a more regular review, perhaps on a monthly basis, with significant involvement in setting objectives and monitoring controls.'
Thursday, July 17, 2008
Brett Scott passes away...Good-bye my friend...You will always be remembered!
He was a great young man, who inspired a lot of people and always had a positive outlook. I am really sorry for the loss to his family as well. His father is Terry Scott, a practicing attorney in SA originally from Zimbabwe.
Terry and Lesly are close friends of mine, and they are in my Prayers. May God be with you always. I know Brett is with God right now. But it is still a great loss to us all.
Asking IRS For A Verified Bill - American Rights Litigators
Asking IRS For A Verified Bill Bryan Malatesta is the CPA with American Rights Litigators (ARL) that has been doing IRS due process hearings for clients for some time now. He conducts the hearings telephonically with the appeals officer while ARL hires a court reporter go into the IRS office and take everything down over a speaker phone. The due process hearings came about because of the IRS Restructuring and Reform Act of 1998.
The purpose of those hearings is to give us a chance to make sure that the IRS followed all of their procedural requirements before they engage in any enforcement action. ARL has had many such hearings for clients where they pointed out various procedural violations to the appeals officer. However, the due process hearings always concluded with an adverse determination from the appeals officer, despite the arguments raised.
Mr. Malatesta had two more due process hearings to do today for ARL clients, but this time Eddie Kahn had him use a different strategy. After the first hearing started, the first thing Mr. Malatesta asked the appeals officer was whether he verified if everything was done properly or not. The key emphasis was on the word "verify", because in Black's law dictionary the term doesn't mean that someone just goes to look.
Mr. Malatesta asked the appeals officer if he verified that there was a bill due and owing by the client. Then he asked him if the numbers that the IRS claimed the client owed were true, correct and complete. The appeals officer claimed to have done all that, so Mr. Malatesta told him that he conditionally accepted the IRS' bill for payment. All he needed to see was a verified bill.
Of course, the appeals officer had no idea what that was, so Mr. Malatesta read to him what the concept of that was out of Black's law dictionary. It says the word "verify" means to confirm or substantiate by oath or affidavit; and, it says the word "verified" when used in a statute ordinarily imports a verity attested by the sanctity of an oath. Lastly, Black's law dictionary also says that the term "verified" is frequently interchanged with the word "sworn".
Once the appeals officer understood what Mr. Malatesta was getting at he claimed that the signed 4340 was the bill. For reference, a 4340 is something like a spreadsheet that shows an explanation of the transactions, assessments, credits, account numbers, Form 23C dates, etc. Then there is someone who signs it. The only problem is when you look at a 4340 it doesn't state what specific tax it is. It doesn't even show that the figures pertain taxes at all.
Now, how can that thing be a bill when it doesn't even say that it's a tax that the IRS is trying to collect? The person that signs the 4340 is just saying that it's an accurate transcript; they don't claim that anyone owes anything. Thus, the 4340 is not and cannot be a bill because a bill can only be something that specifically identifies you as owing a specific amount.
A verified bill is where someone swears under penalties of perjury that you owe the amount shown on the bill. The 4340 is neither of these things. Well, the first appeals officer wasn't going to go for that at all; the 4340 was it as far as he was concerned. When ARL gets his determination letter back, they are going to remind him that he doesn't have any authority to make a determination. If he issues one, (which we know with virtual certainty will be an adverse one) it will have no force and effect. That's because a determination can only come into play when there is a controversy.
In other words, when someone says that you owe something and you say that you don't, then there has to be a determination to settle the controversy. However, when there is an offer to pay like what Mr. Malatesta gave him, then there is nothing to determine because there is no controversy. The only thing the appeals officer needs to decide now is whether he is going to accept Mr. Malatesta's offer or not. This is a set up for the notarial protest that ARL discovered as reported in the 2/26/02 edition of TaxTruth Newsletter.
As a brief recap, a notarial protest is a procedure where you can obtain an administrative judgment against someone if they dishonor you. This occurs if your adversary gives you argument as to why you are wrong or if they remain silent during the time that they can't be silent. The administrative judgment comes about by obtaining a certificate of notarial protest from a notary who knows how to do the procedure. The idea here is for ARL to use the notarial protest if the appeals officer issues a determination letter without accepting or rejecting the offer.
Once ARL obtains the certificate of notarial protest, that's when they will go after the appeals officer individually. In the second due process hearing that Mr. Malatesta did today, it went as expected. There was about a thirty-second pause where the appeals officer tried to digest what Mr. Malatesta said when he told him what he wanted from him. The appeals officer then spoke up and asked Mr. Malatesta to tell him exactly what he wanted. Mr. Malatesta told him he wanted a verified bill, which would be something signed under the penalties of perjury certifying that the bill was true, correct and complete. The appeals officer said he didn't think he could do that since the IRS doesn't normally sign things under penalties of perjury.
Well, the IRS always signs a proof of claim under penalties of perjury when they go into bankruptcy court. The perjury clause says that the signor can go to jail for five years and be subjected to a $500,000 fine for a false or fraudulent claim. The only way that the appeals officers can accept ARL's offer is to give the conditions that ARL asks for, which would be to produce the verified bill.
If they don't accept ARL's offer though, ARL plans to tell the IRS that the tax bill is discharged. They will be discharging it pursuant to Section 3-603(b) of the Uniform Commercial Code (UCC), which appears as follows: U.C.C. - ARTICLE 3 - NEGOTIABLE INSTRUMENTS PART 6. DISCHARGE AND PAYMENT Section 3-603.
TENDER OF PAYMENT.
(a) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument, the effect of tender is governed by principles of law applicable to tender of payment under a simple contract.
(b) If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument and the tender is refused, there is discharge, to the extent of the amount of the tender, of the obligation of an indorser or accommodation party having a right of recourse with respect to the obligation to which the tender relates.
(c) If tender of payment of an amount due on an instrument is made to a person entitled to enforce the instrument, the obligation of the obligor to pay interest after the due date on the amount tendered is discharged.
If presentment is required with respect to an instrument and the obligor is able and ready to pay on the due date at every place of payment stated in the instrument, the obligor is deemed to have made tender of payment on the due date to the person entitled to enforce the instrument. Thus, if they refuse the offer or if they can't produce the verified bill, then the tax bill becomes void.
As far as Eddie can see, even if a tax bill is based upon a past tax court decision it doesn't matter. A person would still have the right to ask for a verified bill. The government itself cannot be a complainant; there has to be somebody who is a complainant or in this case a creditor. Somebody has to say that they have first hand knowledge that the bill is true and correct and verify it via an affidavit or oath. There is nobody in government who can do that. Therefore, when you ask for such a thing they are not going to be able to produce it.
IRS Summons Has No OMB Control Number Sometimes we overlook the remedies that are the most simple. Eddie Kahn told us about one thing that they completely overlooked involving the Paperwork Reduction Act.
That Act says you are not required to disclose anything on any federal form that does not have a valid OMB control number. The Office of Management and Budget is the one who assigns these control numbers and when they do, the number appears in the upper right-hand corner of a form. American Rights Litigators (ARL) always has clients that the IRS sends summonses to where they request books and records.
Well, guess what, both the first and third party summonses that the IRS sends out do not have any OMB control numbers on them. One of ARL's researchers brought this to Eddie's attention this week after he looked under Title 44 USC § 3512, entitled Public Protection.
Here is what it says: TITLE 44 - PUBLIC PRINTING AND DOCUMENTS CHAPTER 35 - COORDINATION OF FEDERAL INFORMATION POLICY Section 3512 - Public protection
(a) Notwithstanding any other provision of law, no person shall be subject to any penalty for failing to comply with a collection of information that is subject to this chapter if -
(1) the collection of information does not display a valid control number assigned by the Director in accordance with this chapter; or
(2) the agency fails to inform the person who is to respond to the collection of information that such person is not required to respond to the collection of information unless it displays a valid control number.
(b) The protection provided by this section may be raised in the form of a complete defense, bar, or otherwise at any time during the agency administrative process or judicial action applicable thereto.
As you can see, the Paperwork Reduction Act shows us that the IRS summons is nothing more than a bootleg request for information. Eddie talked to a fellow recently who said he raised this issue back in 1988 in an order to show cause hearing.
The judge told him that he still had to give the IRS the information they wanted even after showing him the above section, so he appealed it. When he did it though, the IRS came in and canceled their opposition to his objection. They knew the appeals court would probably overturn the verdict and they didn't want to have a precedent set, which is why they did it.
This is important to know for the summons is the IRS' key instrument that they use to gather information on us at the examination level. It has no force and effect at all if we just use the proper argument. ARL No Longer Offers Victoria Joy UCC Tapes In the 2/26/02 edition of TaxTruth Newsletter, we reported that Eddie Kahn and Associates had videotapes on Victoria Joy's recent UCC seminar available.
However, Eddie informed us this week that they are no longer dealing with Ms. Joy and are no longer selling any of her material. This came about due to her apparent inability to communicate with Eddie over compensation issues. After Eddie paid her for the seminar she did at the ARL office, the lady who works with Ms. Joy called Eddie and told him that Ms. Joy was upset; she felt he didn't pay her enough money. So, Eddie gave her an additional $500 and sent back all of her materials, but she still was not happy.
The weekend before last Eddie did a seminar in Reno, Nevada that Ms. Joy flew out to attend. Eddie wanted to try to get things straightened out so he approached her and asked what she thought he owed her. However, the only answer she would give was that she didn't know, which understandably caused much frustration on Eddie's part. She still wouldn't give a specific dollar amount.
This breakdown in communication between them in no way reflects upon the quality of her informational materials though. Eddie still spoke highly about her knowledge and so did many others who got her videotapes. She didn't want Eddie to give out her phone number, but we managed to get an e-mail address for her should you want to order her materials. Her e-mail address is firstname.lastname@example.org
Man Acquitted Using Conditional Acceptance
We heard about an interesting success story from a man in California who benefitted from the information in Victoria Joy's videotapes. He learned about her strategy involving the conditional acceptance and put her principles to good use. The county charged this man with interfering with the administration of government or something to that effect.
It was a misdemeanor charge that threatened him with up to six months in jail. He made up a sixty-eight point conditional acceptance and laid it on the court when he got in there. The judge immediately shut down the proceedings, took him back into his chambers and grilled the guy for three hours trying to get him to dishonor. However, the guy wouldn't budge from his offer of conditional acceptance, so the judge put a continuance on the case.
The court reconvened about ten days later and came up with an acquittal. To date, American Rights Litigators has used the conditional acceptance procedure with the IRS for about 30-40 clients. So far, they have not gone against any of them, which makes Eddie feel very good about the approach. There are many people out there doing UCC processes. Eddie feels many more people will be doing it once they understand how to use the UCC properly and how not to be greedy with it.
There have been many people who tried to buy homes and cars, etc. like the Freemen in Montana did several years ago. But that just leads to trouble. Getting greedy with the UCC process like that is not a good idea because that's when the Federal Reserve gets mad. Eddie said there's no fury like when they get upset.
Offshore Credit Cards
Someone asked Eddie Kahn about a recent Bloomberg Report that talked about how the IRS wants to gain access to offshore credit card information. The report said the IRS has been demanding information from credit card companies to track down widespread tax evasion schemes.
It said American Express agreed to give the IRS information on offshore accounts held by Americans suspected of evading taxes. It further said that MasterCard International has already turned over their accounts. Now the justice department wants VISA International to reveal offshore credit card accounts. This sounds intrusive, but the news article for the most part is probably just a propaganda used by the IRS.
Eddie said American Express probably does have their card holder's personal information since they have their own bank. However, VISA and MasterCard do not have one. The only entities that have a card holder's personal information are the offshore banks that issue the cards. He said VISA and MasterCard don't have any information other than numbers that they receive from the offshore bank.
We did hear some speculation that MasterCard changed their procedures two years ago that goes against what Eddie said. Supposedly the procedures involved the disclosing of card holder information along with numerical information from the bank back to MasterCard. Eddie said if that's true, then it would be news to him. As far as he knows, that's not the way it is though.
DOJ Seeks Injunction Against Doug Rosile
Doug Rosile is an accountant that did Section 861 income tax returns last year for clients of American Rights Litigators (ARL).
About a week ago, there was an article in the Associated Press that said the Justice Department filed a lawsuit against him. However, according to Eddie Kahn he has not been served with any such lawsuit yet. The article accused Mr. Rosile of promoting a scheme that he allegedly used to "under-report" more than thirty-six million in federal income taxes. They claimed that he filed bogus tax refund claims for about 200 clients in 32 states.
One client was actor Wesley Snipes whose refund claim amounted to over seven million dollars alone. You can read about this at CNN's website found at http://www.cnn.com/2002/LAW/03/14/tax.scheme.suit/index.html
Well, the "scheme" that Mr. Rosile used was the law codified under Section 1.861-8 of the IRS' own regulations. Those regulations show specifically what income the Secretary of the Treasury deemed to be subject to the federal income tax. The regulations show that the incomes of foreigners derived from anywhere within the U.S. are subjected to the federal income tax.
As far as U.S. Citizens and Resident Aliens are concerned though, only U.S. Possession and foreign source incomes are subjected to the tax. Incomes derived from within the 50 states are not included there as being taxable for them like it is for foreigners. Thus, the Section 861 returns that Mr. Rosile prepared for his U.S. Citizen clients showed their income derived from within the 50 states as not being taxable.
The 50 states were never included in such a manner because the federal government does not have the authority to regulate intrastate commerce. The government claims that Mr. Rosile's position is based upon on an erroneous assertion that only income from foreign sources is subject to the U.S. income tax.
The news article quoted Assistant Attorney General Eileen O'Connor as saying: "The argument that only foreign sources of income are subject to income tax has been rejected out of hand by every judge who has examined it." This may sound like a rebuttal to the Section 861 refund claims, however, the government did not rebut Section 861 here at all; they did not address Mr. Rosile's position.
Anyone who is truly familiar with Section 861 will quickly agree with what the Assistant Attorney General said. Of course the argument saying that only foreign source income being taxable is false. Section 861 shows that the U.S. source income of a foreigner is subject to the federal income tax, for example. The government cannot rebut what their own regulations say, so they cite a fictitious argument that is inherently wrong and rebut that. Then they use that rebuttal as "proof" that the Section 861 refund claims like what Mr. Rosile did are frivolous filings.
The news article said the government filed a lawsuit against Mr. Rosile, but actually it was an injunction against him to stop filing Section 861 returns. The only problem is the justice department did not exhaust all of their administrative remedies. When Mr. Rosile filed all those Section 861 returns, he asked for an administrative law judge review if they disagreed with him.
The justice department is just trying to go around all that and go straight to the judge and get the injunction. However, they can't go to court until they exhaust all of their administrative remedies. There have been several articles in TaxTruth Newsletter over the past year tracking the progress of We The People.
Bob Schultz and other members of the organization have been trying to get a redress of grievances meeting with the IRS & DOJ for some time now. However, they haven't been getting anywhere with them like that. So, if you can't go in through the front door so to speak, then you go in through the back door.
The We The People organization wants to completely handle Mr. Rosile's injunction case. They want to provide him with all the financial backing and legal help he needs so they can do discovery in court. The government won't give them the answers to their questions in a public forum, so they intend to go into court and get it.
Mr. Rosile's case is a perfect opportunity for them to ask the questions that they want them to answer. They will get the government's expert witness and do a deposition where his or her answers will be given under oath. The injunction case against Doug Rosile here is very similar to the injunction case that the government threw against David Bosset some time ago. Mr. Bosset heard about the government's injunction case in store for him on the news first and then they served him the next day.
In Mr. Rosile's case, it's been almost two weeks since that news article came out and they still have not served him yet. See the 8/14/01 edition of TaxTruth Newsletter, for Mr. Bosset's open letter on his injunction case. IRS Wants To Raise Frivolous Return Penalty Currently, Section 6702 of the tax code allows the IRS to impose a frivolous return penalty of $500 upon anyone who files a frivolous tax return. We got word recently that the IRS wants to raise this penalty to $5,000 via the Taxpayer Protection and IRS Accountability Act of 2002.
Our lawmakers expect to make this so-called Taxpayer "Protection" Act effective by this upcoming April 15. The following is an excerpt from the description of proposal of this Act. Description of Proposal "The proposal would modify this IRS-imposed penalty by increasing the amount of the penalty to up to $5,000 and by applying it to all taxpayers and to all types of Federal taxes.
The proposal would also modify present law with respect to certain submissions that raise frivolous arguments or that are intended to delay or impede tax administration. The submissions to which this provision would apply would be requests for a collection due process hearing, installment agreements, offers-in-compromise, and taxpayer assistance orders.
First, the proposal would permit the IRS to dismiss such requests. Second, the proposal would permit the IRS to impose a penalty of up to $5,000 for such requests, unless the taxpayer withdraws the request after being given an opportunity to do so. The proposal would require the IRS to publish a list of positions, arguments, requests, and proposals determined to be frivolous for purposes of these provisions."
It is so obvious to us that this drastic increase in the frivolous return penalty is nothing more than an intimidation tactic by the federal government. They particularly want to intimidate those who would dare mention 26 USC § 861 and its regulations like in Doug Rosile's case. Since they can't rebut Section 861 refund claims they intend to just silence, rob and harass people through the guise that it's a frivolous return. You can read about all the "protection" our lawmakers want to give us at http://waysandmeans.house.gov/jct/pubs02.html
Disclaimer: This newsletter exists for informational purposes only. It is authored and published independently from Eddie Kahn and American Rights Litigators. Informational content is a RESTATEMENT of verbal updates from Eddie Kahn in a more convenient written form. As such, it is possible that certain technical inaccuracies or inconsistencies may occur. The informational content of this newsletter may or may not accurately reflect the research, ideas, opinions or views of Eddie Kahn, American Rights Litigators or any other featured individual. The author/publisher must disclaim any and all claims of accuracy or validity. The purpose and intent of this newsletter is not and should not be construed as legal or tax advice. For legal or tax advice, you will need to retain the services of a licensed professional.
Thursday, July 10, 2008
Your Rights as a Taxpayer - http://www.irstaxsolvers.com/rights.html
Originally the Taxpayer Bill of Rights concentrated on your rights if audited. It allowed you to be represented by someone authorized to practice before the IRS, have the process explained to you, and to make an audio recording of the audit
(with advance notice). TBOR 2 was expanded to protect your rights in dealing with the collection division of the IRS.
TBOR 3 was passed as part of the IRS Restructuring and Reform Act of 1998. This was an outgrowth of the massive publicity and Congressional hearings on IRS abuses. While there were many provisions to TBOR 3 some of the more applicable items included requiring Chief Counsel approval before the IRS can make a jeopardy or termination assessment. This took some of the power from the IRS employee before you could ask for a review of that employee’s determinations. The new act also prohibited the IRS from requiring you to waive your right to sue the IRS or the US Government in order for them to accept an agreement with you regarding the payment of taxes. The new act disallowed the use of Pseudonyms by IRS employees (unless management approved the request). It also made talking with someone familiar with your situation easier because the IRS representative began adding their name and phone number to the letters they sent you. The act also prohibited the IRS practice of obtaining an extension of the statute of limitations on collections from every taxpayer who owed the government money. Now the requests must be tied to some specific action (like an installment agreement).
And most extensions will expire on December 31, 2002.
TBOR 3 also created the Taxpayer Advocate’s Office. This office replaced the much more taxpayer friendly Problem Resolution Office. The Taxpayer Advocate’s Office is good for straightening out paperwork snafus. But it is in no way a Taxpayer Advocate. It is staffed with front line IRS employees who have moved from Collection or Examination to finish up their career. They are great for moving paperwork along through the IRS but do not advocate for taxpayer rights.
The IRS has listed your rights as a taxpayer in Publication 1 (Your Rights as a Taxpayer). If you receive any notice from them regarding an audit or a collection issue, the IRS will include Publication 1. The publication is a quick read and something you should take a look at.
Let me recap what I think are the most important rights you have with the IRS.
1. The IRS is a part of the US Government. You have all the rights of any citizen including the right to not incriminate yourself.
2. You have the right to be represented by someone authorized to practice before the IRS (enrolled agents, attorneys, certified public accountants).
3. You have the right to stop any interview with the IRS to consult with a representative (unless you have been subpoenaed to the meeting).
4. You have all the rights conferred to you under the constitution as a citizen of the US.
5. You have the right to have the process explained to you
6. You have the right to appeal any decision to a group manager.
7. If you do not like the decision of the group manager you have the right to file an appeal and request that appeals review your case.
8. If an IRS employee violates your rights you have the right to sue the IRS in court and be awarded fees for your trouble.
9. You have the right to audio tape the proceedings (with prior notice to the IRS).
10. And you have the right to have your rights explained to you by the IRS representative you are working with.
The right I think you should exercise first before having any conversation with an employee of the IRS is to talk with an authorized taxpayer representative.
The IRS must allow you that right (unless you are under subpoena).
Whether you decide to retain the services of a taxpayer representative is up to you.
Failing to find out what kind of assistance the representative can offer you is like going to a gunfight with a water pistol. Your odds are not very good.
Tax Risk for Middle Class Americans: Increased Audits and AMT - Erin Peterson
Increased Audits for Middle Income Taxpayers
Since 2000, the number of audits on tax returns filed by those making $25,000 to $100,000 has tripled. This dramatic increase is part of a system-wide change in audit strategy. The IRS claims that too little attention was being paid to middle income taxpayers prior to 2000. They also admit that there was not enough focus on the highest income taxpayers – those making $1 million or more.
In 2006, the chance of a middle income taxpayer being audited was one in 56. During the same year, the highest income filers had a one in 16 chance of being audited and lower income filers – those making less than $25,000 per year – had a one in 94 chance. According to the IRS, this strategy is necessary due to a decreased number of IRS agents and increasing complexity of the tax system.
While the increased audits have been criticized by many, they have proven to be successful. Even if each audit is given less time and attention than before, they are causing people to be more honest on their tax returns. Tax revenue from enforcement actions increased nearly $15 billion in 2006 as compared to 2000.
Alternative Minimum Tax Pitfalls
The second risk to middle class taxpayers is their vulnerability to the alternative minimum tax (AMT). Also known as the "wealth tax," AMT was originally intended to prevent tax avoidance by the rich with high-end tax shelters that create investment income.
However, Tax Policy Center Director Len Burman testified at the House Ways and Means Select Revenue Measures Subcommittee that "because of poor design, millionaires are actually less likely to owe AMT than middle-income people with kids."
Many are now questioning how this code backfired.
One reason is that the AMT does not allow for personal exemptions, standard deductions, or many other tax breaks that benefit middle income families. This causes the household’s taxable income to be higher and is therefore taxed at a higher rate. Examples of these exemptions and deductions that can no longer be taken include child tax deductions and adjustments for state and local taxes in some areas.
Another way the AMT affects middle class families is that the income-exception levels are set too low. Income exemptions used when calculating AMT have not kept up with inflation even though salary increases have. For example, in 1969 the income-exemption level was $30,000 for all fliers. Based on inflation, that would equal $165,000 today. However, the current exemption levels are only $45,000 for joint filers and $33,750 for individual filers.
A final reason that the AMT has not suited its intended purpose is that many millionaires earn a great deal of their income from investment assets. Capital gains and dividends are not recognized as ordinary income and are taxed at a lower rate.
Records show that only around three percent of AMT payers in 2006 were millionaires with tax-shelters – the codes target audience. Most people who owed the tax earned between $200,000 and $500,000. One-forth of the AMT payers made $75,000 to $200,000 in 2006. These are groups that were affected by the inability to use the child tax deduction or state and local tax deductions.
Congress is in the process of holding hearings for the reform of the alternative minimum tax. Some committee members are calling for the AMT minimum income to be set at $200,000. Others are calling for a complete repeal of the code.
Tuesday, July 8, 2008
IRC 409A - www.orrick.com
SWEEPING TAX LAW AFFECTS MOST EQUITY-BASED PLANS
On October 22, 2004, President Bush signed the American Jobs Creation Act of 2004, which significantly changes the federal tax rules that govern “nonqualified deferred compensation plans.” The new law, codified in section 409A of the Internal Revenue Code (“IRC 409A”), prescribes how and when compensation can be deferred.
In addition, IRC 409A provides detailed rules concerning how and when previously deferred compensation can be paid out. Earlier this year, the Treasury Department and the IRS confirmed that IRC 409A applies both to certain equity-based compensation arrangements and to traditional deferred-compensation plans. For example, a nonstatutory stock option may have to comply with IRC 409A if it includes a deferral feature other than the right to purchase stock in the future at a defined price.
Similarly, a restricted stock grant that allows for an election to defer receipt of the underlying shares (e.g., conversion into a restricted stock unit) may also be subject to IRC 409A. To the extent these equity-based arrangements are deemed a “nonqualified deferred compensation plan,” IRC 409A could limit the circumstances under which the nonstatutory stock option can be exercised, in addition to restricting when the exercised/vested shares could be delivered.
Employers have until the end of 2005 to make plan design changes, bring plans into compliance or terminate non-complying plan, provided they operate in “good faith” compliance with IRC 409A during 2005. The statute imposes substantial tax consequences for noncompliance, including immediate taxation, a 20% tax penalty, and interest.
In the coming months, employers should determine what “nonqualified deferred compensation plans” they maintain, keeping in mind IRC 409A’s broad definition of the term. Employers should then review their plans to determine whether and to what extent they must be amended, suspended, or terminated. DEPARTING EMPLOYEES CONTINUE TO CHALLENGE FORFEITURE PROVISIONS Courts and arbitration panels continue to struggle with the legality of deferred-compensation plans, specifically the provisions requiring forfeiture by departing employees of unvested stock or options.
Since the decision in Truelove v. Northeast Capital and Advisory, 95 N.Y.2d 220 (2000), most New York practitioners have accepted the legality of such forfeiture provisions because the deferred payments, whether in stock or options, are not “wages” under the New York Labor Law. Truelove, however, did not resolve the legality of forfeiture provisions in plans where the shares or options are awarded based primarily or exclusively on individual performance.
In Marsh v. Prudential Securities, 1 N.Y.3d 146 (2003), the New York Court of Appeals affirmatively held that a plan under which employees could choose to use deferred wages to purchase shares of a stock index fund was “for their benefit” and thus not an illegal deduction from wages, despite the presence of a forfeiture clause triggered by the employee’s voluntary departure. The Third Circuit, applying New York law, recently reached a similar conclusion in a decision construing the same plan. See Schunkewitz v. Prudential Securities, 2004 WL 896660 (3d Cir. 2004).
In Marsh, the Court of Appeals rejected the suggestion that a per se rule bars any forfeiture provision under New York law. Rather, it called for an examination of the plan in its entirety, giving due weight to:
· the type of employees who participate and the nature of the benefit conferred;
· the manner in which the plan functions;
· the immediate benefits and potential rewards of participation compared to the risk of loss;
· the purposes of the forfeiture provision;
· the clarity of the notice that forfeiture was possible; and
· the voluntariness of the employee’s decision to participate.
Based on that analysis, one court recently dismissed the claims of a class of financial consultants who voluntarily participated in a plan in which they received discounted, unvested stock, obtained substantial tax benefits, received dividends and had voting rights with regard to the unvested stock.
Upadhyaya v. Citigroup, MDL-1354 (D. Mass. June 30, 2004) (unpublished decision) (applying New York law). The court also noted that the forfeiture provision would be permissible even where the plan does not exist solely for the benefit of the participants, so long as it had a significant benefit for the participants.
Despite these positive caselaw developments, employees continue to mount challenges to these types of plans, particularly where the voluntariness of the contribution can be questioned or where they can contend that New York law does not apply. See, e.g., Rosen v. Smith Barney, L10440-99 (N.J. Superior Ct., Essex Co. July 7, 2004) (forfeiture provisions of voluntary deferred-compensation plan violated New Jersey wage law as illegal restrictive covenant).
The Future of Spam Litigation After Omega World Travel v. Mummagraphics - KATHERINE L. WONG
Unsolicited commercial e-mail ("UCE"), commonly known as spam, is both ubiquitous and profitable. In 2006, approximately forty percent of the thirty-one billion e-mails sent daily were classifiable as spam, costing U.S. corporations an estimated $8.9 billion and non-corporate Internet users $255 million.
The Future of Spam Litigation After Omega World Travel v. Mummagraphics KATHERINE L. WONG Harvard University - Harvard Law School Harvard Journal of Law and Technology, Vol. 20, No. 2, p. 459, 2007
To fight spam, ISPs and consumers have mainly relied on self-help measures, including manual filtering, software filtering, and private no-spam registry services. Prior to 2003, a diverse set of state laws provided the only regulatory framework for spam. While these laws took different approaches, they generally sought to eliminate deceptive e-mail practices and reduce the volume of spam.
To address the deleterious effects of spam, Congress enacted the Controlling the Assault of Non-Solicited Pornography and Marketing Act ("CAN-SPAM") of 2003.
CAN-SPAM, like state anti-spam laws, attempts to address deceptive marketing practices and the burdensome volume of spam by imposing header and content requirements on UCE. The Act preempts state anti-spam laws, but it contains a savings clause that allows states to prohibit falsity or deception in UCE and preserves actions arising out of state law that are not specific to e-mail.
To date, both the FTC and ISPs have brought actions under CAN-SPAM. This article examines the likely effects of the Fourth Circuit's recent decision in Omega World Travel, Inc. v. Mummagraphics, Inc. on spam litigation and prevention.
In Mummagraphics, the Fourth Circuit addressed the scope of CAN-SPAM's preemption clause and the appropriate standard for imposing liability for errors in e-mail header information ("header errors"). After providing background on CAN-SPAM and the Fourth Circuit's decision, this article critiques the court's analysis by arguing that its interpretation of CAN-SPAM may insulate senders of spam from legal action. It also examines the possible implications of Mummagraphics for future spam litigation.
While acknowledging that CAN-SPAM has weaknesses, this Note suggests that courts can use CAN-SPAM to facilitate self-help measures, without substantially undermining regulatory uniformity, by interpreting the preemption provision more narrowly and by enforcing the Act's content requirements more strictly.
American Civil Liberties Union - Closing argument against torture by the USA - Major David J. R. Frakt's
I have provided you with legal authority for the proposition that you have the power to dismiss these charges. I can’t stand before you and say that you are legally required to do so. But I can say that that it is a moral imperative to do so, and I ask that you do so.
Major David J. R. Frakt's Closing Argument in Favor of Dismissal of the Case Against Mohammad Jawad (6/19/2008)
On Feb 7, 2002, President Bush issued an order. The order stated, in pertinent part “I accept the legal conclusion of the Department of Justice and determine that Common Article 3 of Geneva does not apply to either al Qaeda or Taliban detainees.” “I determine that the Taliban detainees do not qualify as prisoners of war. . .al Qaeda detainees also do not qualify as prisoners of war.” “Our values as a nation, values that we share with many nations in the world, call for us to treat detainees humanely, including those who are not legally entitled to such treatment. . . As a matter of policy the United States Armed Forces shall continue to treat detainees humanely, and to the extent appropriate and consistent with military necessity, in a manner consistent with the principles of Geneva.”
With these fateful and ill-advised words, President Bush, our Commander-in-Chief, perhaps unwittingly, perhaps not, started the U.S. down a slippery slope, a path that quickly descended, stopping briefly in the dark, Machiavellian world of “the ends justify the means,” before plummeting further into the bleak underworld of barbarism and cruelty, of “anything goes,” of torture. It was a path that led inexorably to the events that brings us here today, the pointless and sadistic treatment of Mohammad Jawad, a suicidal teenager.
President Bush’s words were important, and deserve special attention. For those of us in the military who have faithfully attended our annual Law of Armed Conflict training, or in my case, have given the training many times, the Geneva Conventions and humane treatment were synonymous, they were one and the same. The Geneva Conventions represented the baseline, they embodied the determination of the world to make war a more humane enterprise, to prevent a descent into wholesale barbarity, as had occurred during the Second World War. But now we were being told that humane meant something else, something less, than the Geneva Conventions. And we were being told that we could act inconsistently with the Geneva Conventions, when military necessity demanded it.
Those of us who were familiar with the Geneva Conventions, whose job it was to know them, were puzzled and deeply troubled by the President’s order and had serious forebodings about the implications of such a decision. We understood that there were no gaps in Geneva, there were was no one who fell outside their protection, that Common Article 3 applied to everyone. But the civilian political appointees of this administration intentionally cut out the real experts on the law of armed conflict, the uniformed military lawyers, the JAGs, were out of the loop, for fear that their devotion to the Geneva Conventions might pose an obstacle to their intended course of action.
The State Department, led by Colin Powell, tried to raise a red flag, but to no avail. Instead, the administration chose to rely on the infamous torture memos by John Yoo, Robert Delahunty and Jay Bybee. These secret memos attempted to redefine torture for the purpose of providing legal cover for administration officials who approved the use of patently unlawful tactics. These legal opinions, now disgraced, disavowed, and relegated to the scrapheap of history where they belong, laid the groundwork for the wholesale and systematic abuse of detainees which ultimately ensnared my client, Mohammad Jawad.
I’m sure that all of these people, the President included, thought they were doing what was best. But what sometimes appears to be in the interests of America at first glance, upon further reflection reveals itself not to be. Interning Japanese-Americans during World War II perhaps seemed like a good idea at the time, but in hindsight we can see that it was a terrible injustice, inconsistent with American ideals and utterly unconstitutional.
It is a shameful episode in our history, a xenophobic overreaction. The conscious, deliberate decision to abandon the Geneva Conventions and the entire fiasco that is Guantanamo will undoubtedly be viewed by historians as an even more disgraceful chapter in our history.
The Feb 7, 2002, order of President Bush invited the rule of law to be circumvented. Even though the President paid lip service to humane treatment, by stating that detainees were not legally entitled to be treated humanely, and by his qualification of “to the extent appropriate and consistent with military necessity” the implication was clear — it was only policy to be humane, not a legal requirement, and there would be no legal consequences to those who didn’t treat detainees humanely, if there was some military justification for it.
Of course, during a “global war,” it is possible to rationalize almost anything under the general rubric of military necessity. After all, if there is even a slight possibility that some military advantage might be gained by some course of action, don’t we owe it to our troops to do it? If there is even a minute chance that some sliver of intelligence might be gleaned about an impending terrorist attack, don’t we owe it to the American people to do everything in our power to extract it? The obvious answer to most of those working in detainee operations at Guantanamo and elsewhere was “Yes.”
Adding to the pervasive atmosphere of lawlessness in the early days of Guantanamo was the administration’s assertion that the detainees could be held indefinitely without charge, without access to counsel, without any recourse to challenge their detention. The administration asserted that the detainees were beyond the reach of any federal court and were not eligible for habeas corpus, a hallowed right guaranteed by the founding fathers of this great country. In effect, the administration created a legal black hole at Guantanamo, a policy universally decried by our even our staunchest allies in the war on terror, but steadfastly defended by the administration.
If there was any doubt that the President intended unlawful tactics to be used, all doubt was erased when Secretary of Defense Rumsfeld authorized, on Dec 2, 2002, numerous extra-legal special interrogation techniques. These techniques and how they were developed and utilized were the subject of hearings before the Senate Armed Service Committee yesterday and are described in detail in the book Torture Team, which I have attached to this motion. I’m sure Phillipe Sands would be honored to have his book included in the record of this commission.
Eventually, cooler and wiser heads started to inject some rationality into the treatment of the Guantanamo detainees. Unsung heroes like Alberto Mora, Navy General Counsel, and Admiral Jane Dalton, and the service TJAGs Gen Rives, Gen Romig, fought vigorously for the restoration of Geneva. But it ultimately took the intervention of the Supreme Court to restore the rule of law to Guantanamo. The Court intervened and made it clear that the Geneva Conventions did apply to detainees at Guantanamo, and that they did have the right to habeas corpus, a right that Congress has twice, unsuccessfully, attempted to take away. This fight to restore the rule of law took time, years in fact, in which the detainees of Guantanamo continued to suffer indignity and inhumanity.
It was not until July 2006 when the Deputy Secretary of Defense Gordon England issued a memorandum stating that “common Article 3 of the Geneva Convention applies as a matter of law“ to the treatment of detainees held by the Department of Defense, and that the “humane treatment [is] the overarching requirement of Common Article 3.” Unfortunately, by then, the damage had already been done, both to the detainees and to the reputation of the United States as a law-abiding country.
America is a nation founded on a reverence for the rule of law. We should never forget that when we take an oath to enlist or be commissioned as an officer in the United States Armed Forces, we do not swear to defend the United States, we swear “to support and defend the Constitution of the United States against all enemies, foreign and domestic.”
The Oath of Office for the President contains similar words: "I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States."
Tragically, under the undeniably heavy pressure to defend Americans from terrorist attack, some of our military and civilian leaders lost sight of their obligation to defend the Constitution as well. Under the Constitution all men are created equal, and all are entitled to be treated with dignity. No one is “undeserving” of humane treatment. It is an unmistakable lesson of history that when one group of people starts to see another group of people as “other” or as “different,” as “undeserving” as “inferior,” ill-treatment inevitably follows.
In the Global War on Terror generally and in the detention camps of Guantanamo especially, the detainees were seen as “terrorists,” as “the worst of the worst” something less than human, and were treated accordingly. After six and a half years, we now know the truth about the detainees at Guantanamo: some of them are terrorists, some of them are foot soldiers, and some of them were just innocent people, caught in the wrong place at the wrong time. But the detainees at Guantanamo have one thing in common — with each other, and with us — they are all human beings, and they are all worthy of humane treatment. We should also never forget that no one in Guantanamo has been convicted of a single crime and that even in these deeply flawed military commissions, they are entitled to a presumption of innocence.
Throughout the Global War on Terror we have heard repeatedly from our military and civilian leaders that this was a new kind of war, a war that requires new methods, new ideas, “thinking outside the box.” So that is what the highly creative and motivated people at Guantanamo did, they abandoned the tried and true and lawful methods of Army Field Manual 34-52 and wrote a new playbook, a playbook that included intimidation with dogs, sexual humiliation, and sleep deprivation. These and other methods were employed at Guantanamo and, as the Schlesinger report put it, migrated to Abu Ghraib, where they resulted in the shocking conduct portrayed in the infamous photographs.
The Secretary of Defense said “take the gloves off” and the soldiers and sailors of Guantanamo saluted smartly and said, “Yes, Sir!” In fact, many of the illegal and abusive “enhanced” interrogation techniques were personally approved for use by the Secretary of Defense; other techniques, like the frequent flyer program, were simply invented on the fly. The public revelation of the events at Abu Ghraib on 60 Minutes II in late April 2004, caused the Department of Defense to go into full damage control mode. As part of the damage assessment, Secretary Rumsfeld dispatched the Navy Inspector General, Vice Admiral Church, to Guantanamo to evaluate the treatment of detainees there. He visited Guantanamo from May 5 to May 7, 2004, and reported back to the Secretary and to the press that there was virtually no detainee abuse at Guantanamo, and that everything was in order. Gen Hood was running a tight ship. Detainees received great treatment.
Incredibly, the very day that Admiral Church was investigating conditions at Guantanamo and finding the treatment of detainees to be so wonderful, detention officials at Guantanamo ordered the initiation of the frequent flyer program on Mohammad Jawad. Before the wheels of Admiral Church’s plane were even off the Guantanamo runway, Mohammad Jawad’s arms and legs were being shackled in preparation for the first of 112 moves up and down the hall of L Block, every 3 hours for the next 14 days. While Jawad was being shackled for the first of these moves, back on Capitol Hill, Secretary of Defense Rumsfeld was testifying before the Senate and House Armed Services Committees, reassuring the nation that the abuse at Abu Ghraib was isolated to a few rogue guards.
When Secretary Rumsfeld testified before the HASC on May 7, 2004, the day the torture of Mohammad Jawad commenced, he told Congress, in reference to those detainees who had been abused at Abu Ghraib, Quote “I am seeking a way to provide appropriate compensation to those detainees who suffered such grievous and brutal abuse and cruelty at the hands of a few members of the U.S. military. It's the right thing to do.”
Today, the government takes a decidedly different tack. They deny the suffering of Mr. Jawad, accusing him of being weak. And they are attempting to reward him by pressing forward with the first war crimes trial against a child soldier in the history of the civilized world. Major General Hood the JTF-GTMO Commander who took command in March 2004, states that he ordered the frequent flyer program stopped in late March 2004. He says he did not authorize and would not have authorized the program to be administered to Mohammad Jawad. Gen James T. Hill, the Southcom Commander, the person to whom Maj Gen Hood reported directly, states that he did not authorize the frequent flyer program, did not know about it, and that is was contrary to his orders which required prior approval for sleep deprivation and limited it to four days.
The Joint Detention Group Commander, Maj Gen Cannon disavows any knowledge of Mr. Jawad’s treatment, in fact, MG Cannon seems to have developed a very convenient case of amnesia. The Joint Intelligence Group Director, Esteban Rodriguez, doesn’t know about Jawad’s treatment specifically, but states that there was a second, unauthorized frequent flyer program carried out by the Joint Detention Group used as a form of disciplinary measure. He said, as did Maj Gen Hood, that there was no special effort to collect intelligence from Mr. Jawad, that he was not believed to possess any valuable intelligence. This is borne out by the fact, at least based on the information provided to me by the government, that no interrogations of Mr. Jawad took place at or near the time that he was being tortured. Thus, the most likely scenario is that they simply decided to torture Mr. Jawad for sport, to teach him a lesson, perhaps to make an example of him to others.
Whatever the reason, it was a direct violation of MG Hood’s orders, and a grave breach of the Geneva Convention and the Convention against Torture. According to MG Hood, the first he learned of this is when I informed him a couple of weeks ago. He was provided the DIMS report, the motion, and the spreadsheet that I prepared.
What was his reaction? A resounding thud of indifference. In fact, it took an order from you, your honor, to even get him to talk me about it. Here was a Major General in the Army who has just learned that a detainee was subjected to grave abuse, on his watch, in direct violation of his orders. One would have expected him to go through the roof, to order heads to roll, to launch an immediate investigation and he couldn’t even be bothered.
Quite a contrast from the way General Hartmann reacted when he thought his orders weren’t being followed. As for MG Cannon, he was similarly apathetic, if not more so about the plight of Mohammad Jawad. It is an absolute disgrace that this officer has been promoted twice after allowing a suicidal teenager to be subjected to this kind of abuse in his detention facility. It is my recommendation that charges be preferred against MG Cannon under the UCMJ for cruelty, maltreatment and abuse, dereliction of duty, and violation of a lawful order at the earliest opportunity. He was the Commander of the Detention Group.
He completely and utterly failed to prevent the flagrant abuse of a detainee under his protection. It is high time that someone in a position of authority be held accountable, and not just the guards who were carrying out orders this time.
Why was Mohammad Jawad tortured? Why did military officials choose a teenage boy who had attempted suicide in his cell less than 5 months earlier to be the subject of this sadistic sleep deprivation experiment? Not that anything would justify such treatment, of course, but at least in the case of the other detainees known to have been subjected to sleep deprivation, they were believed to possess critical intelligence that might save American lives.
Unfortunately, we may never know. I’ve asked to speak to the guards who actually carried out the program, and I’ve been denied. In the absence of information to the contrary, which the government would surely provide if it existed, we are left to conclude that it was simply gratuitous cruelty. The government admits that Mohammad Jawad was treated “improperly,” but offers no remedy. We won’t use any evidence derived from this maltreatment, they say, but they know that there was no evidence derived from it because the government didn’t even bother to interrogate him after they tortured him. Exclusion of non-existent evidence is not a remedy. Dismissal is a severe sanction, but it is the only sanction that might conceivably deter such conduct in the future.
February 7, 2002. America lost a little of its greatness that day. We lost our position as the world’s leading defender of human rights, as the champion of justice and fairness and the rule of law. But it is a testament to the continuing greatness of this nation, that I, a lowly Air Force Reserve Major, can stand here before you today, with the world watching, without fear of retribution, retaliation or reprisal, and speak truth to power. I can call a spade a spade, and I can call torture, torture.
Today, Your Honor, you have an opportunity to restore a bit of America’s lost luster, to bring back some small measure of the greatness that was lost on Feb 7, 2002, to set us back on a path that leads to an America which once again stands at the forefront of the community of nations in the arena of human rights.
Sadly, this military commission has no power to do anything to the enablers of torture such as John Yoo, Jay Bybee, Robert Delahunty, Alberto Gonzales, Douglas Feith, David Addington, William Haynes, Vice President Cheney and Donald Rumsfeld, for the jurisdiction of military commissions is strictly and carefully limited to foreign war criminals, not the home-grown variety.
All you can do is to try to send a message, a clear and unmistakable message that the U.S. really doesn’t torture, and when we do, we own up to it, and we try to make it right. I have provided you with legal authority for the proposition that you have the power to dismiss these charges.
I can’t stand before you and say that you are legally required to do so. But I can say that that it is a moral imperative to do so, and I ask that you do so.