United States v. Shellef

United States v. Shellef

Opinion

 [*87] 

SACK, Circuit Judge:

The defendant Dov Shellef owned or operated several companies engaged in the distribution of industrial chemicals. The defendant William Rubenstein owned or operated Dunbar Sales, Inc., and Stevens Industries, Inc., which also distributed industrial chemicals and provided warehousing, packaging, labeling, and billing services to other distributors. The chemical at issue in this case -- CFC-113 -- is exempt from excise taxes if its sale comports with applicable federal statutory and regulatory requirements. Notwithstanding the defendants' representations to the manufacturers from whom they bought the chemical that the defendants would sell it in a manner that would render the sales excise-tax-free, some of Shellef's and Rubenstein's sales of CFC-113 did not comply with at least one of these requirements. The government charged Shellef and Rubenstein jointly with conspiracy to defraud the IRS and wire fraud. The indictment  [**3] also charged Shellef (but not Rubenstein) with 1) personal income tax evasion in 1996; 2) filing on behalf of one of his businesses a corporate tax return that was false insofar as it failed to report legitimate income in 1996; and 3) filing a corporate tax return on behalf of another of his businesses that was false insofar as it failed to report income in 1999. Shellef alone was also charged with money laundering associated with the alleged wire fraud. A jury convicted Shellef and Rubenstein on all charges against them. ¹

On appeal, Rubenstein argues, as a threshold matter, that the 1996 tax charges against Shellef were improperly joined with the conspiracy to defraud and wire fraud charges against him. Shellef similarly argues that the 1996 tax charges should not have been joined with the other charges against him. ²

] Under Rule 8 of the Federal Rules of Criminal Procedure,  [**4] joinder of criminal charges is permissible when, inter alia, the charges are "based on the same act or transaction." Fed. R. Crim. P. 8(a). Joinder of tax charges with non-tax charges under Rule 8 is therefore permissible if "the tax offenses arose directly from the other offenses charged," such as when the funds derived from the acts underlying the  [*88]  non-tax charges "either are or produce the unreported income" that is the basis for the tax charges. United States v. Turoff, 853 F.2d 1037, 1043 (2d Cir. 1988) (internal quotation marks and citations omitted). Even "if the character of the funds . . . do[es] not convince us of the benefit of joining the[] two schemes in one indictment, other overlapping facts or issues may." Id. at 1043-44.

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