People v. Willis

MEMORANDUM OPINION

(November 10, 2014)

Before the Court are Defendant Louis Milton Willis’s March 25, 2014, Motion to Dismiss; Defendant Willis’s April 2, 2014, Motion for a Bill of Particulars; and the People’s My 15, 2014, Motion to Amend Information. Defendant Willis is charged with gross receipt tax violations pursuant to 14 V.I.C. § 11 and 33 V.I.C. §§ 1522, 1523 and 1525(2).

Defendant Willis seeks to dismiss the allegations against him on the grounds that this Court lacks subject matter jurisdiction over income tax matters.1 The People argue in their April 16, 2014, Opposition that “[t]he Information charges Defendants with violations of laws pertaining to gross receipt taxes,”2 not income tax violations. In his June 13, 2014, Reply, Willis reiterates his contention that the crimes he is charged with “may not be prosecuted in the Superior Court.”3

Defendant Willis also filed a Motion for a Bill of Particulars, requesting that the Court order the People to provide certain specifications in order to “protect him from subsequent charges” and for “preparation for trial and his defenses.”4 The People’s April 24, 2014, opposition argues that the Willis’s request is “well beyond what the People are required to provide.”5

*68The People seek to amend the February 24, 2014, Information to “sufficiently track the language of the statutes underlying the charges providing more clarity.”6

Because the Court finds that it has jurisdiction over matters involving gross receipt tax returns, Defendant Willis’s Motion to Dismiss is denied. Because the elements necessary to prove tax evasion differ with the various methodologies, the Court orders the People to provide Defendant Willis with a Bill of Particulars detailing the method of proof it will apply. Lastly, although the Information is otherwise sufficient, the People may amend it to more specifically reflect the charges.

RELEVANT FACTUAL AND PROCEDURAL HISTORY

Louis Milton Willis is the former director of the Virgin Islands Bureau of Internal Revenue. In Count 1, conspiracy to evade or defeat tax, gross receipts, the People allege that Willis provided his codefendant, Gerard Castor, president of Balbo Construction, Inc., with tax clearance letters despite Balbo’s failure to pay gross taxes owed and file gross tax returns in violation of 33 V.I.C. § 1522. In Count III, aiding and abetting a willful failure to collect or pay over tax, gross receipts in violation of 33 V.I.C. § 1523,7 and in Count V, aiding or assisting fraud and false statements in violation of 33 V.I.C. § 1525(2), the People allege that, after leaving the VIBIR, Willis intentionally understated the gross tax liability in gross tax receipts tax filings he prepared on behalf of Balbo.

STANDARD OF REVIEW — MOTION TO DISMISS — SUBJECT MATTER JURISDICTION

“Superior Court Rule 128(a), and not Federal Rule of Criminal Procedure 12, governs pre-trial motions in the Superior Court”.8 Although Superior Court Rule 128(a) requires “[a]ll pre-trial motions [to] be made prior to the motion deadline established by the court,” “[a] litigant may *69challenge the Superior Court’s jurisdiction at any time, even for the first time on appeal.”9 The Superior Court has subject matter jurisdiction over criminal matters that:

(1) arise from the Virgin Islands, and

(2) involve violations of Virgin Islands criminal statutes.10

STANDARD OF REVIEW — BILL OF PARTICULARS

Unlike an Information, which need only contain “a plain, concise, and definite written statement of the essential facts constituting the offense charged,”11 a bill of particulars is a “formal, detailed statement of the claims or charges brought by a plaintiff or prosecutor”.12 While “a bill of particulars cannot save an invalid [Information],”13 it may be used to “inform the defendant of the nature of the charges brought against him, to adequately prepare his defense, to avoid surprise during the trial and to protect him against a second prosecution for an inadequately described offense.”14 In short, “if an Information is otherwise sufficient, a bill of particulars may be granted to inform defendant of the details of the offense charged.”15

*70“The defendant may move for a bill of particulars before or within 14 days after arraignment or at a later time if the court permits,”16 and the request is granted when “an [Information] significantly impairs the defendant’s ability to prepare his defense or is likely to lead to prejudicial surprise at trial”.17

STANDARD OF REVIEW — MOTION TO AMEND INFORMATION

“[T]he Superior Court ‘may permit an Information to be amended at any time before the verdict,’ [unless] ‘an additional or different offense is charged or a substantial right of the defendant is prejudiced.’ ”18

DISCUSSION

I. Willis’s Motion to Dismiss

Willis contends that he is charged with violating the Virgin Islands income tax laws and, because the Superior Court lacks jurisdiction over that subject matter, the allegations against him should be dismissed.19 The People respond that the charges involve violations of gross receipt tax laws, not income tax laws.20

A. The Information Alleges Violations of Virgin Islands Gross Receipt Tax Laws, Not Federal Income Tax Laws.

Willis states that he is charged with “ ‘conspiracy to evade or defeat a tax imposed by the Virgin Islands income tax law’ ... in violation of 33 V.I.C. § 1522 [and] . . . aiding and abetting ... to violate the Virgin Islands income tax law in violation of 33 V.I.C. [§§ 1523 and 1525(2)].”21 He appears to argue that the Information only charges him with violating income tax laws, and because these laws are within the exclusive jurisdiction of the federal courts, the allegations against him must be dismissed.

*71 A “sufficient” Information must: (1) “contain the elements of the offense charged and fairly inform a defendant of the charge against which he must defend,” and (2) “enable him to plead an acquittal or conviction in bar of future prosecutions for the same offense.”22 The Information “should be read ‘in its entirety, construed according to common sense, and interpreted to include facts which are necessarily implied’.”23 “[Informations] are read for their clear meaning and convictions will not be reversed because of minor deficiencies which do not prejudice the accused.”24

The Information, when read as a whole, clarifies the counts of which Willis complains. Count I alleges that “Willis . . . conspired to evade or defeat a tax imposed by the Virgin Islands income tax law, to wit: gross receipt taxes” Count III alleges that “Willis[ ] aided and abetted Gerard Castor ... to collect or truthfully account for and pay over taxes by willfully failing to file gross receipt tax returns,” and Count V alleges that “Willis prepared or caused the preparation and presentation ... of false or fraudulent gross receipt tax returns”.25

The Court and the accused can also look to extraneous sources referenced in the Information for clarity as to the charges.26 Willis is charged with violating 33 V.I.C. §§ 1522, 1523 and 1525(2).27 Section 1522 is violated when “two or more persons conspire to evade or defeat *72any tax imposed by this subtitle or by the Virgin Islands income tax law.”28 Section 1523 is violated when one who is “required by this subtitle or the Virgin Islands tax law to collect, account for, and pay over any tax imposed by this subtitle or the Virgin Islands income tax law, willfully fails to collect or truthfully account for and pay over such tax.”29 And Section 1525(2) is violated when one “willfully aids or assists in ... any matter arising under[ ] the internal revenue laws, of a return . . . which is fraudulent or is false as to any material matter”. Chapter 3 of Title 33 addresses gross receipts taxes, and, like Sections 1522, 1523 and 1525(2), is within Subtitle 1 of the internal revenue laws of the Virgin Islands. Therefore, Sections 1522, 1523 and 1525(2) encompass violations of many Virgin Islands tax requirements, including gross receipts and income tax abuses. Therefore, the Information is sufficient because it fairly informs the defendant — both on its face and by references to external sources — of the charges against which he must defend. The Information charges Defendants with violating our gross receipts tax laws, and an acquittal or conviction of these charges will bar future prosecution for the same offenses.

B. Gross Receipt Taxes Are Not Income Taxes.

Defendant Willis’s motion to dismiss is premised on the Court’s lack of jurisdiction over income tax violations,, while he is, in fact, charged with violating the gross receipts tax laws. Income taxes are paid by individuals or entities in proportion to their net income, after deductions,30 while gross receipts taxes are derived from “all receipts, cash or accrued, of the taxpayer for services or derived from trade, business, commerce or sales, and the value accruing from the sale of tangible personal property or services, or both . . . without any deduction *73on account of . . . any other expenses whatsoever”.31 In 1984, Congress clarified the distinction between the federal and territorial tax, providing that “[t]he taxes imposed by . .. any territory ... shall be treated as local taxes.”32 The Virgin Islands gross receipts taxes were fashioned through the 1956 Internal Revenue Act of the Virgin Islands, approved January 27, 1956,33 while income taxes were established here by the Naval Service Appropriations Act of 1922.34 Although these taxes are both Virgin Islands internal revenue taxes35 subject to Virgin Islands internal revenue *74laws,36 they are not the same taxes. Defendant Willis’s argument that the charges against him should be dismissed because the Superior Court lacks jurisdiction over income tax matters mischaracterizes the matter before the Court.

C. The Mirror Code Does Not Bar Prosecution of This Matter in the Superior Court.

Defendant Willis contends that he is charged with crimes that reflect the federal tax code, and “mirrored tax crimes may not be prosecuted in the Superior Court ... if only due to the federal need for a consistent interpretation of federal criminal tax law”.37 First, the local courts have absolutely no jurisdiction over —: and little influence concerning — matters within the federal courts, aside from their contributions to the local rules of decision when federal law is not controlling.38 The local courts need not be concerned about the “needs” *75of the federal courts. Instead, when determining the laws of our territory the Court considers “the best rule for the Virgin Islands . . . based on the unique charactenstics and needs of the Virgin Islands.”39

Secondly, as discussed below, jurisdiction over Virgin Islands gross receipt tax matters is not exclusive to the federal courts. “Congress designed Virgin Islands tax law to mirror the tax laws in effect on the mainland” and “as a result of this legislation, the words ‘Virgin Islands’ are substituted for the words ‘United States’ throughout the Internal Revenue Code.”40 “Under this ‘Mirror Code’, the provisions of the Internal Revenue Code and its accompanying regulations apply to taxes levied in the Virgin Islands except where displaced by local law.”41 Chapter 3 of the Title 33, Taxation and Finance, of the Virgin Islands Code deals exclusively with local tax matters,42 and it is not “mirrored” from the federal tax laws. And even if our gross receipts tax laws mirrored those of the Internal Revenue Code, that alone would not prohibit prosecution within this Court. Therefore, the Mirror Code does not prevent prosecution of this matter by the Superior Court.

D. Birdman Is Not Applicable Because That Matter Deals With Income Taxes.

Willis appears to argue that the Third Circuit held in Birdman v. Office of the Governor43 that this Court lacks jurisdiction over gross receipts tax matters. However, gross receipts are not even addressed in Birdman. Instead, the Third Circuit clarified that the District Court of the Virgin Islands has “ ‘exclusive jurisdiction’ over proceedings ‘with respect to the income tax laws applicable to the Virgin Islands’ ”.44 This *76“exclusive” jurisdiction is not without limits, because the Third Circuit also clarified that the Virgin Islands District Court’s exclusive jurisdiction over income tax matters is only exclusive “as against local courts in the Virgin Islands.”45 Thus, while the Superior Court lacks the jurisdiction to hear a Virgin Islands income tax matter, other federal courts, when appropriate, may.46

Additionally, the concerns addressed by the federal court in Birdman regarding income taxes are not parallel to concerns of our jurisdiction regarding local gross receipts taxes. Unlike income taxes, the Virgin Islands gross receipts laws are not “analogous to a federal tax”47 and subject to the federal courts “uniformity of interpretation”48 concerns. And even if gross receipts tax matters were analogous to a federal tax, the Third Circuit acknowledged that “exclusive federal court jurisdiction over cases arising under federal law has been the exception rather than the rule.”49 Therefore, Birdman has no bearing on the Superior Court’s authority to hear matters involving local taxes on gross receipts.

E. Case Law Supports Superior Court Concurrent Jurisdiction Over Gross Receipts Taxes.

In 1972, the Third Circuit Court of Appeals held that 33 V.I.C. § 45(b), which “provides for judicial review of an arbitrary assessment [by the Commissioner of Finance] of gross receipts taxes in municipal *77court,” “is not a limitation on the jurisdiction of the district court.”50 The Third Circuit held that the District Court had concurrent jurisdiction via the Organic Act51 to review appeals of municipal court decisions regarding “arbitrary assessments in cases of delinquencies,” “[original] judicial review of the Commissioner’s computations ... for delinquent taxpayers,” and “for judicial review by nondelinquent taxpayers”.52 The Third Circuit Court of Appeals reiterated in Quinn in 1982 that, pursuant to 33 V.I.C. § 45, the District Court shares jurisdiction with the “inferior courts” to review petitions requesting a stay of execution53 to collect delinquent gross receipts taxes “pending determination of the actual amount due.”54

In 1984, Congress modified the jurisdiction of the Virgin Islands District Court, but this change had no effect on the concurrent jurisdiction of the local and District Court over matters arising under 33 V.I.C. § 45. Twenty-eight (28) years after the jurisdictional changes, in 2012, the Third Circuit stated in Birdman that it had already “resolved numerous disputes about the overlap in jurisdiction between the District Court and the [Superior] Court” in both Quinn and Pan Am, affirming its previous findings of concurrent jurisdiction between these courts to hear petitions regarding gross receipts tax matters. Birdman, Pan Am and Quinn support concurrent jurisdiction between the Superior and District Court regarding other gross receipt concerns.

*78F. The Revised Organic Act and Statutory Law Support Superior Court Concurrent Jurisdiction Over Gross Receipts Taxes.

The District Court of the Virgin Islands “does not derive its jurisdiction, as do other federal courts, from Article III”.55 Instead, Article IV of the United States Constitution “authorizes Congress to regulate the various U.S. territories,” and this power is excised over the Virgin Islands through the Revised Organic Act.56 “Under the judiciary subchapter of the [Revised] Organic Act [of 1954] . . . [Congress gave the] District Court of the Virgin Islands . . . both federal question jurisdiction and general original jurisdiction in all. . . causes in the Virgin Islands except in those cases where Congress has placed exclusive jurisdiction elsewhere.”57 However, when Congress amended the Revised Organic Act in 1984,58 it “refashioned the jurisdiction of the V.I. District Court.”59 Congress bestowed upon the Virgin Islands District Court “the jurisdiction of an Article III District Court of the United States, though it remains an Article IV Court.”60 While the District and the Superior Court now share concurrent jurisdiction over matters not expressly vested in the federal courts,61 including over gross receipts taxes, the Virgin Islands Legislature [now has the power to] vest jurisdiction over Virgin Islands tax matters in the local courts.”62 “These amendments, however, were not *79self-executing,”63 and, to date, the Virgin Islands Legislature has not wrested jurisdiction from the District Court over gross receipts. Therefore, the Superior Court continues to have concurrent jurisdiction over local gross receipts tax matters.

Additionally, “the relationship between the District Court and the Superior . . . Court, both of which are Article IV courts, now somewhat resembles the relationship between Article III federal district courts and state courts.”64 In fact, “if the Virgin Islands were a state and the district court were an Article III court, [the district court] could not enjoin, suspend or restrain the assessment, levy or collection of the tax.”65 Congress has, over time, begun to empower the Virgin Islands with independence similar to that of a state,66 a move that supports the Superior Court’s authority in this matter.

G. Common Sense Dictates That Laws Emanating From the Virgin Islands Legislature and Signed Into Law by the Governor of the Virgin Islands That Relate to a Purely Local Tax Should be Interpreted and Enforced Locally.

As explained in detail above, the Superior Court has concurrent subject matter jurisdiction over criminal matters that arise from and *80involve violations of the Virgin Islands local taxes on gross receipts. Because our Legislature can only determine67 — but not create68 — jurisdiction over local matters, reasonableness dictates that alleged violations of local laws should be determined by our local courts, with an eye toward what is best for the people of the Virgin Islands.69

II. Willis’s Motion for a Bill of Particulars

In his untimely motion, Defendant Willis moves the Court to require the Government to produce a bill of particulars “to protect him against subsequent charges resulting from the same underlying conduct and to answer particular questions,” alleging that “the answers thereto [are] necessary for [his] preparation for trial and his defenses”.70 The Government responds that “Defendant is essentially requesting that the People lay out its entire case ... for his review, which is well beyond what the People are required to provide” and that “the People provided more than enough Information in the charging. documents to sufficiently appraise the Defendant of the charges against him and the basis of said charges in order that he may present a defense.”71 The Court has already addressed the sufficiency of the Information. Therefore, the Court will analyze whether Willis may be granted a bill of particulars to inform him of the details of the offenses charged.

Defendant alleges that he is “without Information sufficient to prepare his defense,” such as “more specific Information on which acts were allegedly attributable to [him] and . . . when each occurred in time” because “the offenses at issue herein ... all appear to be governed by a six (6) year statute of limitations.”72 Willis is charged with conspiring with — and aiding and abetting — Defendant Castor in evading or defeating and failing to collect or pay over taxes on gross receipts, as well *81as fraud and making false statements regarding these taxes. “The purpose of a statute of limitations is to limit exposure to criminal prosecution to a certain fixed period of time following the occurrence of those acts the legislature had decided to punish by criminal sanctions.”73 Defendant Willis acknowledges that “the Information alleges the life of the conspiracy to be from January 1, 2002, to February 25, 2008,”74 and each charge alleges a course of conduct spanning that same time period.75 The Third Circuit Court of Appeals has recognized that “it is permissible to charge conspiracy to evade several years’ taxes as one count where the underlying basis of the indictment is an allegedly consistent, long-term pattern of conduct directed at the evasion of taxes for these years.”76 Defendants were arrested on February 14, 2014, within the six (6) year statute of limitations for the crimes described in the Information.

Defendant Willis also alleges that a bill of particulars is necessary because “the Information fails to provide sufficient designations and specificity” to establish any “acts and comments” made by Willis establishing “a prima facie case of his knowledge . . . and willing involvement in” either “generalized conduct” or the conspiracy.77 Such specificities are not even necessary to support a conviction because “[t]he government may prove [the] elements [of a conspiracy] entirely by *82circumstantial evidence.”78 Circumstantial evidence is based on inference,79 thus “[t]he existence of a conspiracy can be inferred from evidence of related facts and circumstances”.80 Likewise, the People are not required to conclusively establish the “dates and locations for the formation of any conspiracy.”81 “In the usual course, [conspiracies] are inherently secretive affairs . . . formed by tacit agreement. . . and[,] . . . [f]or these reasons, only the conspirators may know precisely when their unlawful combination came into being.”82 The People need not establish when exactly Willis joined the conspiracy •— only that he did.83 Similarly, the Information charges that the events took place between the dates of January 1,2002, and February 25, 2008. Willis is not charged with joining the conspiracy after February 25, 2008, and any additional actions would simply be considered in furtherance of the already active conspiracy.

*83Willis states that more specific details regarding the conspiracy are necessary to establish an alibi defense. Again, the Information states that the conspiracy spanned the period of January 1, 2002, to February 25, 2008.84 Willis is accused of improperly issuing tax clearance letters to Defendant Castor from 2002 through 2006.85 The People have provided dated tax clearance letters signed by both defendants.86 Willis is also accused of preparing false and fraudulent gross receipts tax returns for Balbo for the years 2004 through 2007.87 The People have provided Willis with dated 2006 and 2007 gross receipts tax returns,88 Defendant Willis has sufficient details to establish an alibi defense, if appropriate.89

Defendant Willis also seeks Information regarding “[w]hen, if ever, he withdrew from the conspiracy,”90 Withdrawal is a defense,91 and while the People are required to share discovery with the accused,92 it is not required to engineer or put forth affirmative defenses for the Defendant.93 The Court finds that the information requested regarding Count I has already been provided or is unnecessary to support a conviction, and the People are not required to produce additional information.

Regarding Counts III and IV, Defendant Willis argues that he requires “any and all specifics pertaining to what in particular Defendant did that *84was fraudulent as to each Count,” “any and all specificities upon which the Government contends that this Defendant filed each return,” and “designation of each false entry on the return and the (approximate) date, amount, character and source of income this Defendant failed to report.”94 Count III specifically states that Willis aided and abetted Castor in failing to file gross receipt tax returns on behalf of Balbo during the years 2002-2007 and aided and abetted Castor in understating the company’s gross income for the years 2004 through 2007, income that determines the amount of gross receipts tax owed. The affidavit in support of the Information describes the procedure in which tax clearance letters are to be provided, and contrasts that procedure with how Willis allegedly usurped the process.95 The affidavit also alleges that Castor hired Willis to prepare Balbo’s delinquent gross receipts tax returns, provides the date these fraudulent returns were filed with the VIBIR, and states that the data provided on the tax returns does not match Balbo’s bank records.96 The People have provided Willis with, among other things, gross tax returns, transcripts of account, a tax clearance rejection letter, tax clearance letters signed by Willis, and bank statements regarding the tax clearance letters and gross receipts tax returns.97 Defendant is not without information sufficiently detailed to prepare any defenses and avoid surprise regarding these aspects of Count III.

Finally, Defendant claims that the Government must supply its “method of proof’ regarding Count III.98 Within the Third Circuit, it has been noted that “due to the complex nature of tax evasion cases, several methods of proof have been developed,”99 including the specific evidence method, that employs direct evidence, or the net-worth, cash expenditures or bank deposits methods,- which employ circumstantial evidence.100 Although it appears that the People will seek to prove that the “reportable income [provided] by the Defendants] . . . does not appear on [the gross *85receipts] tax return or appear[s] in [a] diminished amount”101 via the specific evidence method, because “each of these methods of proof entails proof of certain operative facts,”102 the Court will order that the People clarify which method it will use in order that the Defendant can prepare an applicable defense.

Defendant Willis fails to establish that he is without information sufficient to inform him of the charges against him, to prepare his defense, to avoid surprise and to protect him against additional prosecution for the same offenses. “[T]he government should not be forced to declare all its evidence or its theory of the case”.103 Although the Court will order the People to supply its method of proof, the remainder of Defendant Willis’s requests are denied.

In addition to his motion for a bill of particulars, Willis also contends that “by containing separate crimes for different years, each Count is multiplicitous.”104 “Duplicity is the joining in a single count of two or more distinct and separate offenses, which results in a general verdict of guilty that may fail to safeguard the defendant’s right to be free from double jeopardy, frustrate appellate review, or otherwise prejudice the defendant.”105 This matter does not evoke any duplicity concerns because the alleged behavior was consistent for each year under each charge, separate counts for the individual tax offenses listed under each charge would result in even greater sentencing concerns by Willis, and the statutory language does not prohibit the Government from charging Willis for multiple events under one count.106 Defendant also contends Counts III and V charge the same crimes.107 However, Counts III and V invoke separate statutes, one that involves the mechanism to attain (fraud and false statements) and a second that concerns the illegal ends desired and achieved (willful failure to collect or pay over tax). These are not duplicitous charges.

*86III. Motion to Amend the Complaint

Because the Court finds that the Defendants will not be prejudiced and that the People do not seek to add an additional or different offense, the Court will allow the People to amend the Information to include the references to Subtitle I in Counts I and II.108

CONCLUSION

• The Court finds that it has jurisdiction over matters involving gross receipt tax returns, and Defendant Louis Milton Willis’s March 25, 2014, Motion to Dismiss is denied. The Court orders the People to provide Defendant Willis with a Bill of Particulars detailing the method of proof it will employ to establish any tax evasion. Lastly, the People may amend the Information to more specifically reflect the charges. An appropriate Order is issued simultaneously herewith.