Tax Law

Making a Cheek Good Faith "Defense" Without Testifying

In United States v. Kokenis, ___ F.3d ___, 2011 U.S. App. 23370 (7th Cir. 2011), here, the Seventh Circuit affirmed a conviction, although the Court rejected the trial court's notion that the defendant must testify -- thereby waiving his Fifth Amendment privilege and subjecting himself to cross-examination -- in order to assert the defense. (Technically, as noted in the excerpts below, the defense is not a defense since the Government must prove willfulness which is absent if the defendant acted in good faith; but in order to rivet the jury's attention on the "defense", the defendant will want to introduce evidence and get a specific good faith instruction.)  The opinion has a good discussion on why the defendant's proferred evidence of his subjective defense was inadequate to raise the "defense" sufficiently to obtain the instruction.  (For my previous discussion of the trial court's holding rejected by the Seventh Circuit, see Cheek Good Faith - Must the Defendant Testify to Assert the Good Faith "Defense" (10/13/10), here.)

The court erred in thinking that evidence of Kokenis's state of mind had to come from Kokenis's own testimony. See, e.g., United States v. Lindo, 18 F.3d 353, 356 (6th Cir. 1994) ("'[T]he standard of evidence necessary to warrant a [good-faith reliance] instruction cannot include an absolute requirement that the taxpayer must testify, for that would burden the taxpayer's own Fifth Amendment right against self-incrimination.'") (quoting United States v. Duncan, 850 F.2d 1104, 1115 n.9 (6th Cir. 1988)); United States v. Phillips, 217 F.2d 435, 442 (7th Cir. 1954) (noting that evidence of defendant's good-faith reliance on advice of counsel can come from the government's witnesses or the defendant's witnesses). Although a defendant's own testimony might be the best evidence of that defendant's good faith, a defendant can offer evidence of good faith in other ways. For example, circumstantial evidence may tend to show good faith and hearsay statements of the defendant may suggest a defendant's belief.

Nonetheless, Kokenis was not entitled to a good-faith instruction. First, the evidence did not support this theory of good faith. Kokenis's claim that the district court wouldn't allow him to present evidence of good faith unless he testified is wrong. He simply didn't offer any evidence relevant to his good faith....

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