Monday, November 23, 2009
A Taxing Matter: Fifth Circuit Finds Exception To Confidential Marital Communications Privilege Applied In Tax Fraud Appeal
Federal courts recognize a confidential marital communications privilege, under which (according to most courts) a spouse can prevent a testifying spouse from testifying about confidential marital communications and/or a testifying spouse can refuse to testify about confidential marital communications. Some federal courts, however, have an exception to this privilege for confidential marital communications about crimes in which the spouses are jointly participating. But what happens when a spouse proposes criminal activity that would implicate both spouses and the other spouse advises against that criminal activity, but the proposing spouse nonetheless engages in the criminal activity? Should the exception apply? That was the issue faced by the Fifth Circuit in its recent opinion in United States v. Miller, 2009 WL 3924052 (5th Cir. 2009). I think that the court got it wrong.
In Miller, Dr. Garland Miller was a general practitioner who employed six staff members, including his then-wife, Rhonda Miller, a registered nurse who worked with him to manage the practice. Dr. Miller was indicted on two counts of tax evasion. Specifically, Dr. Miller allegedly earned taxable income in 2000 and 2001 for which taxes were due, but attempted to evade the tax by: (1) failing to timely file tax returns; (2) failing to pay tax on the income; (3) "converting...payments to him or his wife to cash and money orders"; and (4) "embezzling payments due to DeSoto [Regional Medical System]...which he then converted...to cash and money orders."
At trial, Dr. Miller's now ex-wife testified, Inter alia, about discussions she had with Dr. Miller during their marriage wherein they disagreed about his decision not to file taxes. After he was convicted, Dr. Miller appealed, claiming, among other things, that his ex-wife's testimony should have been excluded under the confidential marital communications privilege.
The Fifth Circuit disagreed. First, it noted that the confidential marital communications privilege potentially applied despite the facts that the Millers were no longer married because "[t]he confidential communications privilege survives the [end of a] marriage and may be asserted by either spouse with respect to communications that occurred during the marriage even after the marriage has terminated." But the problem for Dr. Miller, according to the court, was that
We have recognized an exception to the confidential marital communications privilege for those "conversations between husband and wife about crimes in which they are jointly participating...."....The testifying spouse need not be charged with a crime, so long as the testimony conveys joint criminal activity.
According to the court, the testimony of Dr. Miller's ex-wife "involved conversations about a joint criminal activity and thus [wa]s not protected by the confidential marital privilege." Really? I'm not convinced that this was joint criminal activity. If Dr. Miller had proposed the criminal activity and his wife agreed, there would have been communication regarding crimes in which the spouses were jointly participating. But Dr. Miller's ex-wife testified that she disagreed with Dr. Miller about his decision not to file taxes. Now, Dr. Miller ostensibly ignored that advice and committed tax fraud, which presumably subjected his wife to liability as well. That, however, came later. I don't see how, at the time of the subject communication, Dr. Miller and his wife were engaged in joint criminal activity when his wife told him to file taxes.
Moreover, even if the court found that Dr. Miller and his wife were engaged in communications about crimes in which the spouses were jointly participating, I still don't think that the aforementioned exception applied. Why? The major case cited by the court on the exception issue was United States v. Ramirez, 145 F.3d 345, 355 (5th Cir. 1998), in which the Fifth Circuit noted that "[t]his circuit adopted the Seventh Circuit's approach to the joint participation exception when it announced that where both spouses are substantial participants in a patently illegal activity, even the most expansive marital privilege should not bar testimony."
Even if we credit the Fifth Circuit's conclusion that Dr. Miller's wife was a participant in the tax evasion, I don't see how it could find that she was a "substantial participant" in that tax evasion, especially at the time of the subject communications. She disagreed with her husband about his decision not to file taxes and then failed to report his failure. At most, this makes her a "tacit participant," not a "substantial participant."