United States v. Richard Lee Graham (11th Cir. December 2020)

The Federal Docket

February 1, 2021

Obstructing Administration of IRS – The Government may prove the nexus element of corruptly endeavoring to obstruct the Internal Revenue Code under 26 USC 7212(a) by providing evidence of a defendant’s conduct towards or relating to collection activity by the IRS, which constitutes a “particular adminsitrative proceeding.”

Richard Lee Graham was convicted of passing a fictitious financial instrument under 18 U.S.C. 514(a)(2) and corruptly endeavoring to obstruct the administration of the Internal Revenue Code under 26 U.S.C. 7212(a). Graham had allegedly attempted to satisfy a significant and overdue tax obligation with a fraudulent $3.6 million check “known as an international bill of exchange,”

Graham appealed his conviction under Section 7212(a), which now has three elements since the Supreme Court’s 2018 decision in Marinello v. United States: 1) the defendant knowingly tried to obstruct or impede the due administration of the internal revenue laws, 2) the defendant acted corruptly, and 3) there must be a nexus between the defendant’s conduct and a “particular administrative proceeding, such as an investigation, an audit, or other targeted administrative action.

At issue was whether the IRS’s “collection activity” qualifies as a “particular administrative proceeding.” The Eleventh Circuit concluded that it does.

The IRS had assigned an officer to collect Graham’s unpaid taxes, and the officer had consistent communications with Graham’s attorneys. The IRS sent Graham multiple lien and levy notices, and when Graham continued making only small payments, the IRS confiscated and sold some of Graham’s real estate assets.

Graham and others eventually sent the IRS a packet of documents purporting to be an “international bill of exchange” in the form of a $3.6 million check, the amount of Graham’s outstanding tax liability. Based on the “suspicious” document, the IRS accepted but did not process the payment.

The Court held there was sufficient evidence of a “nexus” between Graham’s submitting the fraudulent check and the IRS’s collection action, which was a “particular administrative proceeding” that went beyond “routine, day-to-day work…such as the review of tax returns.”

The Court rejected Graham’s arguments that the IRS sending liens, levies, and notices as part of a collection action is not part of an administrative proceeding, emphasizing that the adminsitrative proceeding does not have to be a “quasi-judicial proceeding” to be an administrative proceeding. It was sufficient that the collection action was a “targeted adminsitrative action,” which the Court noted last five years in this case and included confiscating Graham’s property, sent him notices of liens, and communicating with his attorneys.

The Court also rejected Graham’s argument that there was no nexus between his conduct and the targeted administrative action because his conduct did not have an actual effect on any lien, levy, or seizure. The Court concluded that there is no element involving the likelihood of success under Section 7212.

The Court also rejected a variety of evidentiary challenges by Graham, whose defense at trial was that he was a victim of fraud by a third party who helped him prepare and submit the international bill of exchange. The Court held that the district court did not commit plain error from limiting the third party’s testimony relating to their subjective belief of the bill’s authenticity, excluding the government expert witness’s answer to a question on cross-examination, and excluding evidence that Graham made “good-faith efforts” to satisfy his debt obligation. The Court also noted that plain error review was proper because, even though the district court did not hear arguments from the defense when sustaining the government’s objections, the defense had not offered any.

Appeal from the Middle District of Alabama
Opinion by Grant, joined by Marcus and J. Carnes

Click here to read the opinion.

Tom Church - Tom is a trial and appellate lawyer focusing on criminal defense and civil trials. Tom is the author of "The Federal Docket" and is a contributor to Mercer Law Review's Annual Survey in the areas of federal sentencing guidelines and criminal law. Tom graduated with honors from the University of Georgia Law School where he served as a research assistant to the faculty in the areas of constitutional law and civil rights litigation. Read Tom's reviews on AVVO. Follow Tom on Linkedin.

Scroll to Top