# Petition for Writ of Certiorari — Hughes v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1993
- **Citation:** 507 U.S. 909

## Text

IN THE

Supreme Court of the United States

October Term, 1992

MARTIN J. HUGHES,
Petitioner,

VS.

UNITED STATES OF AMERICA,
Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES
Court OF APPEALS FOR THE SIXTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

PERCY SQUIRE

Counsel of Record

BRICKER & ECKLER

100 South Third Street
- Columbus, Ohio 43215

(614) 227-2300

Counsel for Petitioner

THE GATES LEGAL PUBLISHING CO., CLEVELAND, OHIO—TEL. (216) 621-5647

QUESTION PRESENTED

Whether the legislative aim underlying the thirteen
year disqualification from holding union office pursuant
to 29 U.S.C. Section 504(a} is to punish or is merely a
restriction which is a relevant incident to a regulation.

TABLE OF CONTENTS

QUESTION PRESENTED......................
were tee CAPNEELINTS ....................... lil
See GP AUTHORITIES .................... vil
RM OOM MOPIOe BUMCRAO WY eke okey ]
i pS Lo, 3

CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED

STATEMENT OF THE CASE
ARGUMENT

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I. Because the Court of Appeals for the Sixth
Circuit's Determination That the Thirteen
Year Disqualification Provision in 29 U.S.C.
Section 504(a) Does Not Constitute
Punishment Is Inconsistent with Binding
Precedent of This Court, This Court Should
Find That the Retrospective Application of
29 U.S.C. Section 504(a) to Martin J. Hughes
Constituted a Violation of the United States
Constitution's Prohibition Against Ex Post
ee

~]

A. The disqualification provisions in 29 U.S.C.
Section 504(a) constitute ‘‘punishment"’ for
the purposes of ex post facto analysis..... 9

B. An action considered to be punishment for
Bill of Attainder analysis is punishment for
purposes of ex post facto analysis....... . 1]

ce 1 a 16

iv.
APPENDIX:

Judgment Entry ot the Court of Appeals for the
Sixth Circuit (May 13, 1992)................. Al

Opinion of the Court of Appeals for the Sixth
eres City BS, OD. veces ia eeesne A2

Memorandum and Order of the United States
District Court (September 5, 1991) ........... Als

Memorandum and Order of the United States
District Court (August 1, 1991).............. A21

Judgment and Opinion of the United States Court
of Appeals for the Sixth Circuit (April 4, 1999). A38

Memorandum and Order of the United States

District Court (November 13, 1987)........... A5l
Memorandum and Order of the United States

District Court (October 20, 1986)............. A66
Memorandum and Order of the United States

District Court (July 25, 1986)................ A75
Order of the United States Court of Appeals for

the Sixth Circuit (November 21, 1986) ........ A80

Order of the United States Court of Appeals for
the Sixth Circuit Denying Petition for
Rehearing (May 21, 1990)................... A&2

Order of the United States Court of Appeals for
the Sixth Circuit Granting Motion to Stay
Issuance of Mandate (June 12, 1990).......... A84

Order of the United States Court of Appeals for
the Sixth Circuit Denying Petition for
Rehearing (July 30, 1992) ............00c000. A86

MUSE. SI Nee
SURE I: eee

29 U.S.C. $504

oe & +. 8 4.8 2 Ss SSS Be SSeS Se Se eS ES Oe Se Bee

Vi.

TABLE OF AUTHORITIES

Cases:

Calder uv. Bull, 3 Dall. 386, 1 +L. Ed. 648
(1798) tk we Rae ae eee ee 7,12

Cummings v. Missouri, 4 Wall 277, 18 L. Ed.

KE) | a ir iran ener e uy oun rin arnt rc 7,10,13
DeVeau v. Braisted, 363 U.S. 144 (1960) ........ passim
Hawker v. New York, 170 U.S. 189 (1898). ........ 13,14
In Ex Parte A. H. Garland, 71 U.S. 366

(ROGT) . vnc eee e ane ees ey ewe eee 12,13
Miller v. Florida, 482 U.S. 423 (1987) ............. 7,8
Postma v. International Brotherhood of Teamsters,

337 F.26@ GOD tle Cat. Tei wl ea ees 14
U.S. v. Hughes, 964 F.2d 536 (6th Cir. 1992) ...... 8,11
United States v. Brown, 381 U.S. 437 (1965)... .. passim
United States v. Jalas, 409 F.2d 358 (7th

Car. FOG) c. . s oi i tives oe oe ee ee eee eee 9,14
Weaver v. Graham, 450 U.S. 24 (1981)............ 7,8
Statutes:

IS U.S. SU0GR ok ans chee ee ee eee
28 U.B4.. SISO oc 5 ks eee ee 3

29 U.S.C. $504.......: POE ee TE Re or passim

Constitution:
ta RA, Palen By SEM eae aes ee eee . passim

Miscellaneous:

Comprehensive Crime Control Act of 1984 U.S.
Rr ee i)

Cong. Code & Admin. News, at 297-99

No.

IN THE

Supreme Court of the United States

October Term, 1992

MARTIN J. HUGHES,
Petitioner,

VS.

UNITED STATES OF AMERICA,
Respondent.

PETITION FOR A Writ OF CERTIORARI To THE UNITED
STATES CouRT OF APPEALS For THE SIXTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW

The following court rulings are found in the
Appendix:

1. Memorandum and Order of the United States
District Court for the Northern District of Ohio dated
July 25, 1986;

2. Memorandum and Order of the United States
District Court for the Northern District of Ohio dated
October 20, 1986;

2

3. Memorandum and Order of the United States
District Court for the Northern District of Ohio dated
November 13, 1987;

4. Order of the United States Court of Appeals for
the Sixth Circuit denying defendant's petition for writ of
mandamus and motion for stay dated November 21,
1986;

5. Judgment and Opinion of the United States
Court of Appeals for the Sixth Circuit dated April 4,
1990 (reported as Hughes v. United States, 899 F.2d
1495 (6th Cir. 1990);

6. Order of the United States Court of Appeals for
the Sixth Circuit denying defendant's motion for
rehearing dated May 21, 1990;

7. Order of the United States Court of Appeals for
the Sixth Circuit> granting motion to stay issuance of
mandate pending application to the United States
Supreme Court for writ of certiorari dated June 12, 1990;

8. Memorandum and Order of the United States
District Court, Northern District of Ohio, Eastern
Division (August 1, 1991);

9. Memorandum and Order of the United States
District Court, Northern District of Ohio, Eastern
Division (September 5, 1991);

10. Judgment and Opinion of the United States
Court of Appeals for the Sixth Circuit dated May 13,
1992 (reported as Hughes v. United States, 964 F.2d 536
(6th Cir. 1992)); and

11. Order of the United States Court of Appeals for
the Sixth Circuit Denying Petition for Rehearing and
Suggestion for Rehearing En Banc (July 30, 1992).

3

JURISDICTION

The Judgment of the United States Court of Appeals
for the Sixth Circuit was entered on May 13, 1992.
Petitioner filed a Petition For Rehearing And Suggestion
Of Rehearing En Banc on May 27, 1992 which was
denied by the Sixth Circuit on July 30, 1992. This
petition has been filed within ninety days of the Court's
Order denying Petitioner's Motion for Rehearing. This
Court's jurisdiction is invoked pursuant to 28 U.S.C.
$1254(1).

4

CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED

The question presented raises a statutory issue
regarding the disqualification provisions of Section 504(a)
of the Landrum-Griffin Act, The Labor Management
Reporting and Disclosure Act (“LMRDA”) 29 U.S.C.
§$504(a), see p. A&Y9. The question presented, also, raises a
constitutional issue regarding the United States
Constitution's provision that ‘‘No Bill of Attainder or ex
post facto Law shall be passed.’ U.S. Const. Art. I, $9,
cl. 3.

5

STATEMENT OF THE CASE
This petition presents a very narrow issue for review,
whether United States v. Brown, 381 U.S. 437 (1965),
remains controlling authority in its conclusion that
disqualification from Union office under 29 U.S.C.
§504(a) is punishment within the meaning of Article I.

Section 9 of the United States Constitution.

In July, 1987, Mr. Martin J. Hughes was convicted
in the United States District Court for the Northern
District of Ohio on two counts of violating 18 U.S.C.
$1001. Following appeal on matters unrelated to the
issue presented by this petition, Mr. Hughes was
sentenced on August 1, 1991, by the district court.
Under authority of the disqualification provisions
contained within 29 U.S.C. §504(a), the district court
imposed a thirteen year disqualification from union
oftice on Mr. Hughes.

Mr. Hughes’ convictions under 18 U.S.C. $1001 arose
from acts committed in 1982 and 1983. Mr. Hughes was
convicted of the filing of false LM-2 reports to the
Department of Labor. It is not disputed by the United
States that at the time of Mr. Hughes conduct,
specifically 1982 and 1983, the disqualification provisions
of Section 504(a) were not triggered by a violation of 18
U.S.C. $1001. Section 504(a) did not include violation of
18 U.S.C. §1001 until it was amended in 1984. Because of
the retrospective application of Section 504(a)
disqualification to Mr. Hughes, he appealed his sentence
as violative of the United States Constitution's
prohibition against ex post facto laws. The Court of
Appeals rejected this contention on May 13, 1992. See p.
Al. On May 27, 1992, Mr. Hughes filed a Petition for
Rehearing and Suggestion for Rehearing En Banc

6

(“Petition for Rehearing’) of the Appellate Panel's
Opinion, specifically seeking review of the Court's
mistaken determination that application of the Section
504(a) disqualification to him did not constitute
retrospective application of a penalty in violation of the
Constitution's ex post facto prohibition. This Petition
was denied by Order of The Sixth Circuit on July 30,
1992.' See p. A&6. This Petition for Writ of Certiorari

timely followed.

It should be noted that the evidence establishes that Petitioner
Hughes was not personally enriched in any manner and did not
receive any funds either directly or indirectly; rather, the convictions
involved record keeping violations.

ae cece neem

7
ARGUMENT

I. BECAUSE THE COURT OF APPEALS FOR
THE SIXTH CIRCUIT'S DETERMINATION THAT
THE THIRTEEN YEAR DISQUALIFICATION
PROVISION IN 29 U.S.C. SECTION 504(A) DOES NOT
CONSTITUTE PUNISHMENT IS INCONSISTENT
WITH BINDING PRECEDENT OF THIS COURT,
THIS COURT SHOULD FIND THAT THE
RETROSPECTIVE APPLICATION OF 29 U.S.C.
SECTION 504A) TO MARTIN J. HUGHES
CONSTITUTED A VIOLATION OF THE UNITED
STATES CONSTITUTION’S PROHIBITION
AGAINST EX POST FACTO LAWS.

The ex post facto clause mandates that ‘“‘[nlo ... ex
post facto law shall be passed.’’ U.S. Const. Art. I, Sec.
9, cl. 3. In Weaver v. Graham, 450 U.S. 24 (1981), the
Supreme Court held that the Constitution’s ex post facto
prohibition forbids the Congress from enacting any law
which “imposes a punishment for an act which was not
punishable at the time it was committed; or imposes
additional punishment to that then prescribed.’ 450 U.S.
at 28 (quoting Cummings v. Missouri, 4 Wall 277,
18 L. Ed. 356 (1867). In Miller v. Florida, 482 U.S.
423 (1987), the Supreme Court reaffirmed that ‘‘[e]very
law that changes the punishment, and inflicts a greater
punishment, than the law annexed to the crime, when
committed’ violates the ex post facto clause of the
United States Constitution. Jd. at 429 (emphasis added)
(quoting Calder v. Bull, 3 Dall. 386, 1 L. Ed. 648 (1798)).
The prohibition on ex post facto laws serves two goals
fundamental to the preservation of a free society: (1) it
assures that legislative acts give fair warning of their
effect and permits individuals to rely on their meaning
until explicitly changed; and (2) it restricts governmental
power by restraining arbitrary and potentially vindictive

8

legislation. Weaver, 450 U.S. at 28-29; accord Miller, 482
U.S. at 429-30. Both of these goals have been
undermined by the present application and interpretation
of 29 U.S.C. $504(a) to Mr. Hughes.

According to the Supreme Court, an ex post facto
law is one that (1) is a criminal or penal measure; (2) is
retrospective, that is, it applies to events occurring
before its enactment; and (3) disadvantages the offender
because it imposes a greater punishment. Miller, 482
U.S. at 430; Weaver, 450 U.S. at 29 (1981). In this case,
the second and third requirements have clearly been
satisfied by the facts of this case and in essence
conceded by the United States.? The key question for
analysis is whether the statute constitutes a regulatory
or penal measure.

Martin J. Hughes was convicted under 18 U.S.C.
$1001 for actions committed by Mr. Hughes in 1982 and
1983 at the Communication Workers of America. At the
time of this conduct, a conviction under 18 U.S.C. $1001
did not implicate Section 504(a) of the Landrum-Griffin
Act. As the Sixth Circuit noted:

... in 1982 and 1983, section 1001 offenses were not
among the listed offenses giving rise to section
504(a) disability. U.S. v. Hughes, 964 F.2d 536 (6th
Cir. 1992).

? During March 1982 and April 1983, the time during which Mr.
Hughes engaged in the conduct which formed the basis for his
convictions under 18 U.S.C. §1001, abuse or misuse of a position with
a labor union, was not an offense for which a disability provision of 29
U.S.C. §504 was applicable. Further, there can be no dispute that the
ability to impose a thirteen-year disability from holding union office
for offenses, which had previously not been subject to such disability,
disadvantages a defendant. See, Miller, 482 U.S. at 430-33; Weaver,
450 U.S. at 33.

9

However, Section 504(a) was amended in 1984 to include
Section 1001 offenses. While the amendment became
effective October 12, 1984, its provisions explicitly state
it is applicable to any conviction after October 12, 1984,
regardless of when the underlying conduct might have
occurred. /d., at 539.

Mr. Hughes claimed before the Sixth Circuit and
contends today that retroactive application of a punitive
measure, such as this, violates the United States
Constitution's prohibition against ex post facto laws.
The Sixth Circuit rejected this analysis and found that
the retrospective application of Section 504(a) to Mr.
Hughes was constitutional, because the prohibition
against holding union office and exercising First
Amendment rights was not the type of punishment the
ex post facto clause sought to prevent. This conclusion
directly contradicts an express determination by the
United States Supreme Court, United States v. Brown,
381 U.S. 437 (1965), and is inconsistent with other
opinions of this Court.

A. The disqualification provisions in 29 U.S.C.
Section 504(a) constitute “‘punishment”’ for the
purposes of ex post facto analysis.

In this case, the statute at issue, 29 U.S.C. §504,
which imposes a disability from holding union office for
persons who are convicted of certain enumerated crimes,
is a penal or criminal measure. See, e.g., United States v.
Jalas, 409 F.2d 358 (7th Cir. 1969); see also
Comprehensive Crime Control Act of 1984, H. Rep. No.
98-1030, Sept. 17, 1984, as reprinted in 1984 U.S. Cong.
Code & Admin. News, at 297-99 (intent of provisions of
Comprehensive Crime Control Act of 1984, which
increased the crimes that would disqualify an individual

10

from holding certain positions with a labor union was to
increase available penalties because the penalties used to
protect labor relations had proven to be ‘‘inadequate’).
This Court has consistently held that disqualification
provisions constitute a form of punishment’ under
constitutional analysis. The United States v. Brown
court stated:

Disqualification from office may be punishment, as
in cases of conviction upon impeachment.
Disqualification from the pursuits of lawful
avocation, or from positions of trust, or from the
privilege of appearing in the courts, or acting as an
executor, administrator, or guardian, may also, and
often has been, imposed as punishment. 381 U.S.
437, 448 (1965) (quoting Cummings v. Missouri, 4
Wall 277, 320).
In United States v. Brown, the Supreme Court found
that the provision of the Landrum-Griffin Act that made
it a crime for a past member of the communist party to
hold labor union office, 29 U.S.C. §504(a), constituted a
Bill of Attainder. 381 U.S. 437. Directly at issue in the
Brown case was the argument that Section 504(a) did not
constitute a Bill of Attainder because the prohibition it
imposed was not ‘‘punishment.”’ It was contended by the
Solicitor General that the statute was enacted for
preventive rather than retributive reasons. Specifically,
the Solicitor argued that the disqualification was
necessary to ensure that certain persons were kept from
positions where they could bring about undesirable
results. Jd.. at 457. The Supreme Court summarily
disposed of this contention:

It would be archaic to limit the definition of
‘“‘punishment’’ to “‘retribution’’. Punishment serves
several purposes: retributive, rehabilitative,
deterrent—and preventive. One of the reasons
society imprisons those convicted of crimes is to

11

keep them from inflicting future harm, but that does
not make imprisonment any the less punishment.
Id., at 458.

The Court ultimately concluded “it ... clearly appears
that Section 504 inflicts punishment within the meaning
of the Bill of Attainder Clause.’ Jd. Therefore, this Court
has definitively ruled that $504 constitutes punishment
for purposes of the Bill of Attainder clause.

The Circuit Court failed to observe and defer to the
Supreme Court's previous binding determination that the
legislative aim of the disqualification provisions of
Section 504(a) was punitive. This preliminary
determination characterized Section 504(a) as punitive
for all analysis, ex post facto or Bill of Attainder.

B. An action considered to be punishment for Bill
of Attainder analysis is punishment for
purposes of ex post facto analysis.

A judicial determination that a legislative enactment
constitutes “‘punishment”’ for Bill of Attainder analysis
is equally applicable to ex post facto analysis. The Sixth
Circuit attempts to distinguish Brown by noting that:

the Brown opinion addressed the Bill of
Attainder Clause and was not intended as a
disposition of an ex post facto challenge to this
provision. U.S. v. Hughes, 964 F.2d 536, 541 (9th
Cir. 1992).

However, the Sixth Circuit's argument is merely a
distinction without a difference. A series of United
States Supreme Court opinions concerning Bills of
Attainder and ex post facto laws have established that a
determination that a statute violates either the Bill of
Attainder or ex post facto prohibition, requires a
prerequisite determination that the underlying legislative

12

aim of the statute is punitive. A determination of
legislative aim must precede any eventual conclusion
that a statutory provision is a Bill of Attainder or ex
post facto law. Once this preliminary determination has
been made, subsequent scrutiny of the statute for a Bill
of Attainder or ex post facto deficiency is secondary; it
has no bearing on the preliminary determination of
legislative purpose.

In its earliest opinions on the subject, the Supreme
Court discussed the technical meaning of the words ex
post facto when applied to law. See, Calder v. Bull, 3
Dall. 386, 395 (1798)). In Ex Parte A. H. Garland, 71
U.S. 366 (1867), the Court determined whether
disqualification from a profession for past conduct was
punishment. The Court stated:

[A]nd exclusion from any of the professions or
any of the ordinary avocations of life for past
conduct can be regarded in no other light than as
punishment for such conduct. The exaction of the
oath is the mode provided for ascertaining the
parties upon whom the Act is intended to operate,
and instead of lessening, increases its objectionable
character. All enactments of this kind partake of the
nature of bills of pains and penalties and are subject
to the constitutional inhibition against the passage
of bills of attainder, under which general designation
they are included.

In the exclusion which the statute adjudges, it
imposes a punishment for some of the acts specified
which were not punishable at the time they were
committed; and for other of the acts it adds a new
punishment to that before prescribed, and it is thus
brought within the further inhibition of the
Constitution against the passage of an ex post facto
law. In the case of Cummings v. Missouri, just
decided, we have had occasion to consider at length
the meaning of a bill of attainder and of an ex post

13

facto law in the clause of the Constitution
forbidding their passage by the States, and it is
unnecessary to repeat here what we there said. Ex
Parte A.H. Garland, 71 U.S. 366, 370 (1867).

In Cummings v. Missouri, 71 U.S. 356 (1867), the
Court determined ‘‘disqualification from office may be
punishment, as in cases of conviction upon
impeachment.” In Cummings, the Court’s concern was
whether the exclusion from office at issue was intended
as punishment, which could be effected in the form of an
ex post facto law or a bill of attainder. 71 U.S. at 364.
rhe Cummings disqualification was found to be punitive.
The outcome was the same in Ex Parte A. H. Garland.

The Sixth Circuit next contends that its resolution of
this case is required by this Court's holding in DeVeau v.
Braisted, 363 U.S. 144 (1960),* where the Supreme Court
upheld a New York statute (referred to hereinafter as §8)
that disqualified all felons, past or present, from union
office. However, this position is contrary to both the
applicable law and simple logic. DeVeau articulates the
focal point of ex post facto analysis to be:

Whether the legislative aim was to punish that
individual for past activity, or whether the
restriction of the individual comes about as a
relevant incident to a regulation. ... DeVeau, 363
U.S. at 160.

In Hawker and DeVeau, it was determined that the
legislative aim in relation to both statutes in question
was to regulate not punish. Accordingly, retrospective
application of the statutes under review in DeVeau and
Hawker did not violate the ex post facto clause.
However, these rulings in no way indicate that 29 U.S.C.

'The Sixth Circuit also cites approvingly Hawker v. New York, 170
U.S. 189.

14

‘' Since the

§504(a) is somehow not punitive in nature.
legislative aim in DeVeau and Hawker was found to be
regulatory, retrospective application of the
disqualification under the statutes in questions there, did
not violate the Constitution’s ex post facto prohibition.
This does not, however, insulate any legislative
enactment, disqualifying persons convicted of felonies
from office. even if the stated aim of the legislation in
question is punitive, from ex post facto invalidation.
The Brown ruling unequivocally makes this point.

In Brown, notwithstanding the holding in DeVeau
that the New York waterfront statutory scheme was
regulatory and could for this reason be applied
retrospectively, the Court found that Section 504(a)
disqualification was intended to be punitive. In no
opinion of the Supreme Court has the question of
whether a legislative enactment is punitive turned on
whether the ultimate inquiry was bill of attainder versus
ex post facto based. The decisive issue is simply one of
whether punishment or regulation was_ intended.

‘Contrary-to-the Court of Appeal’s assertion, following Brown does
not require the overruling of DeVeau. DeVeau simply stated that
Section &, the New York statute under review, could be applied
retrospectively. Brown states Section 504(a) may not be applied
retrospectively. Retrospective application of Section 504 was not the
issue in DeVeau, it was retrospective application of Section 8 only
DeVeau did not hold that Section 504 was regulatory. DeVeau merely
held Section 504 did not preempt Section &.

The Court of Appeals cites Postma v. Intl Brotherhood
of Teamsters, 337 F.2d 609 (2d. Cir. 1964) as support for the
proposition that Section 504(a) is regulatory. Postma was decided in
1964, prior to the United States Supreme Court determination in
1965 in Brown that Section 504(a) is punitive. Moreover, United
States v. Jalas, 409 F.2d 358 (7th Cir. 1969) the only Circuit Court of
Appeals opinion since Brown to deal with the issue of whether
Section 504 is punitive, determined unequivocally that Section 504 is

a punitive statute

15

Legislation does not have split intent as suggested by
the Court of Appeals. A measure is either punitive or
regulatory.

As stated in DeVeau:

The question in each case where unpleasant
consequences are brought to bear upon an individual
for prior conduct, is whether the legislative aim was
to punish that individual for past activity, or
whether the restriction of the individual comes
about as a relevant incident to a regulation.

DeVeau at 160.

The Court of Appeals suggests that Brown's finding
that Section 504 is punitive is limited to a Bill of
Attainder analysis. This is incorrect. Under the passages
cited above in Brown and DeVeau, the central question
focuses upon the character of the disability imposed.
Once the character of a disability has been determined, it
is unsound reasoning to suggest that it may change
when the ultimate question is different. Brown found
Section 504 disability to be punitive. The Sixth Circuit
was bound by this determination and simply refused to
follow Brown.

‘The dissent in Brown noted: ‘When an enactment is challenged as
an attainder, the central inquiry must be whether the disability

imposed by the act is punishment ... or is regulation ...."°’ Brown at
163.

16

CONCLUSION

Because the Court's review is needed to confirm the
punitive nature of the sanction imposed pursuant to 29
U.S.C. §504(a) with respect to the United States’
Constitutional prohibition against ex post facto laws, to
resolve the conflicting interpretations of this statute
between the United States Supreme Court and the
Courts of Appeals, and to clarify the effect the United
States v. Brown, supra, ruling has on the DeVeau v.
Braisted, supra, opinion, this Court should grant the
Petition for Writ of Certiorari.

Respectfully submitted,

PERCY SQUIRE

Counsel of Record
BRICKER & ECKLER

100 South Third Street
Columbus, Ohio 43215
(614) 227-2300
Counsel for Petitioner

Al
APPENDIX

JUDGMENT ENTRY OF THE COURT OF APPEALS
FOR THE SIXTH CIRCUIT
(Filed May 13, 1992)
No: 91-3720

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA.
Plaintiff-A ppellee,

V.

MARTIN J. HUGHES,
Defendant-Appellant.

Before: MARTIN and RYAN, Circuit Judges;
WILHOIT, District Judge

JUDGMENT

ON APPEAL from the United States District Court
for the Northern District of Ohio at Cleveland.

THIS CAUSE was heard on the record from the
district court and was argued by counsel.

ON CONSIDERATION WHEREOPF., it is ordered
that the judgment of the district court is affirmed.

ENTERED BY ORDER OF THE COURT

‘s/ LEONARD GREEN
Clerk

A True Copy.

Attest:

‘s/) VALERIE FIELDER
Deputy Clerk

Issued as Mandate: August 11, 1992

A2
OPINION OF THE COURT OF APPEALS
FOR THE SIXTH CIRCUIT
(Decided and Filed May 13, 1992)
RECOMMENDED FOR FULL-TEXT
PUBLICATION
Pursuant to Sixth Circuit Rule 24
No. 91-3720
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

Vv.

MARTIN J. HUGHES,
Defendant-Appellant.

On APPEAL FROM THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF OHIO

Before: MARTIN and RyAN, Circuit Judges; and
WILHOIT, District Judge.*

BoycE F. Martin, JR., Circuit Judge. Martin
Hughes, a former labor union official, appeals his
sentence for various violations of the Internal Revenue
Code and federal false statements statutes. In Hughes v.

The Honorable Henry R. Wilhoit, Jr., United States District Judge
for the Eastern District of Kentucky, sitting by designation.

A3

United States, 899 F.2d 1495 (6th Cir. 1990), this court
addressed Hughes’ first appeal in this case. We affirmed
in part and reversed in part the district court's decision
and remanded the case for re-sentencing. Hughes is
presently appealing the re-sentencing. For the following
reasons, we affirm Hughes’ sentence.

Martin Hughes was charged and found guilty of
breaching his trust as the manager of a union branch of
the Communication Workers of America. We need not
recite the facts surrounding his conviction because they
are found in Hughes, 899 F.2d at 1495. To put the
present appeal in context, however, we need to detail the
terms of both Hughes’ original sentence and his new
sentence.

Hughes’ first sentencing occurred on November 13,
1987. At-that time, the district court sentenced Hughes
to two years probation for assisting in the filing of false
W-2 tax forms and fined Hughes $10,000 for ten counts
of falsifying union records. In addition, the court
imposed on Hughes a three-year civil and employment
disability, as authorized by 29 U.S.C. §504 of the Labor
Management Reporting and Disclosure Act of 1959. The
disability imposed by the court barred Hughes from
representing or serving as an officer in Communication
Workers of America for three years. The district court's
imposition of the three-year term represented a
discretionary reduction downward from section 504's
automatic imposition of a thirteen-year disability. The
court reduced the disability to three years because it
believed Hughes’ conduct resulted from a misguided but
benign interest in helping his union.

Thereafter, the parties initiated their first appeal to
this court. On January 13, 1988, we stayed imposition of
the three-year disability pending completion of the

A4

appeals process. On April 4, 1990, we affirmed Hughes’
conviction and sentence with two exceptions. First, we
ordered the reinstatement of the felony convictions
contained in counts thirty-six and thirty-seven of the
indictment. These counts were for making false
statements on labor reporting documents, in violation of
is U.S.C. $1001. Second, we ordered the district court to
reduce the felony conviction for count thirty-four, which
regarded falsified W-2 forms, to a misdemeanor.

Hughes sought certiorari from the United States
Supreme Court. While petition for review was pending,
Hughes requested that we continue to stay his disability.
We ranted his request for a continued stay on June 12,
1990. Thereafter, the Supreme Court denied his request
for certiorari. The stay expired on December 5, 1990,
after we issued a mandate ordering re-sentencing and
formally terminating the appeals process.

The district court re-sentenced Hughes on August 1,
1991, after two days of hearings. The court heard
additional evidence that, the court stated, had a ‘‘bearing
on the efficacy of any sentence to be imposed.’’ The new
evidence demonstrated that, since the time of his original
sentencing in 1987, Hughes had continued to meddle in
the affairs of the Communication Workers of America.
Even though Hughes was dismissed from his vice-
president position three days after his original
sentencing, he persisted in attempting to control
Communication Workers of America activities by (1)
maintaining his old office, (2) giving orders to union
secretaries, and (3) controlling funds without
authorization. Hughes apparently utilized his former
office space through the summer of 1988 and only left
after the union ordered him to leave. Additional evidence
at the re-sentencing hearing showed Hughes interfered

A5

with three union accounts that contained significant
amounts of money. The court’s’ re-sentencing
determination noted that because Hughes’ offenses were
commited prior to the Sentencing Reform Act of 1984,
the court had broad discretion in the way in which it

could fashion a new sentence.

On appeal, Hughes’ protests the court's
consideration, at re-sentencing, of matters that occurred
following Hughes’ first appeal. Hughes’ complaint is not
directed at the court’s specific factual determinations,
but rather against the district court’s ability to consider
such subsequent conduct. We reject this claim and note
that the district court has broad discretion to consider
information in a sentencing determination.

Count thirty-four charged Hughes with violating 26
U.S.C. §7204. Hughes was found guilty of violating
section 7204 for furnishing an employee of United
Telephone Credit Union with a false W-2 form. Under
this misdemeanor conviction, the district court could
have ordered Hughes to pay a $1,000 fine, could have
sentenced him to one year in prison, or both. At re-
sentencing, the court imposed two years probation
instead of the maximum penalties allowed under law.
Moreover, the court found Hughes exempt from serving
this probation because Hughes had already served two
years probation for the felony conviction under the same
count. See North Carolina v. Pearce, 595 U.S. 711, 716
(1969) (court should reduce probation period to reflect
time already served).

Counts thirty-six and thirty-seven of the indictment
charged Hughes with violating 18 U.S.C. §1001, which
prohibits falsification of information given’ to
government agencies. Hughes violated this section when
he caused the Communication Workers of America to file

A6

talse ““LM-2° reports with the Department of Labor.
Unions annually submit LM-2 reports to the Department
of Labor. The reports disclose the salary and expenses of
employees who receive more than $10,000 during the
year. If convicted under section 1001, a person could
have to pay up to $10,000 in fines, serve up to five years
in prison, or both. At re-sentercing, the district court
suspended Hughes’ sentence under both counts, and
ordered three vears of probation for each count, running
concurrently. '

The district court then considered whether it was
still appropriate to reduce Hughes’ automatic civil
employment disability from thirteen years to three years,
given this court's order reinstating the felony convictions
under counts thirty-six and thirty-seven. The district
court found that reduction of the automatic disability
was now inappropriate in light of Hughes’ conduct since
his first sentencing. Specifically, the court found that
‘‘his actions demonstrate[d] a general contempt for the
existing authority of the union.’’ The court noted that
section 504 was designed to purge the labor movement of
its criminal element and to prevent convicted union
leaders from regaining control of union government. The
court emphasized that it was not sentencing Hughes to
the thirteen-year disability because of his actions since
the original sentencing. The court stated that, in order to

' During the initial re-sentencing, the district court sentenced Hughes
to five years of probation on counts thirty-six and thirty-seven. After
finding that (1) Hughes had already served two years probation under
counts thirty-three and thirty-four, and (2) this two years went
towards the five-year sentence for counts thirty-six and thirty-seven,
the court reduced the five year probationary period for counts
thirty-six and thirty-seven. The court found that a reduction was
required under 18 U.S.C. §2661, which prohibits consecutive terms of
probation totaling more than five years on separate counts of one
indictment.

——<— re

give full effect to the statute's provisions, it was merely
refusing to exercise its discretion to reduce a statutorily
required thirteen-year period. Under the court’s order,
Hughes may not exercise “any decision-making authority
Over any organization, committee, or account that
receives any of its funds from a labor organization and/or
its members for the purpose of contributing money to
political candidates” during the time he is subject to the
section 504(a) disability.

Shortly after re-sentencing, the district court
amended its re-sentencing order to credit Hughes for
time already served under the thirteen-year disability.
The court found that the disability first became effective
on November 13, 1987, which is when the court
originally sentenced Hughes. The district court ruled
that our stay, which we issued on January 13, 1988,
tolled the disability period from that date until December
5, 1990, which is the date the district court received the
mandate ending the appeals process. Accordingly, the
district court reduced Hughes’ thirteen-year civil and
employment disability by the nine months and twenty-
six days Hughes had already served under the disability.

Hughes makes four arguments on appeal. First,
Hughes argues that the thirteen-year disability under
section 504 is a violation of the United States
Constitution’s Ex Post Facto Clause because the
disability imposes punishment on Hughes in excess of
the punishment that could have been imposed lawfully at
the time the criminal conduct occurred. Second, Hughes
argues that the Double Jeopardy Clause precludes
imposition of a sentence for count thirty-six because the
conduct underlying count thirty-six also formed the basis
for count thirty-four. Third, Hughes complains that the
language of the district court order pertaining to the

A8

disability provision is overly broad and violates Hughes’
First Amendment right to freedom of association.
Finally, Hughes argues that the district court erred in
calculating the amount of credit he should receive for
time he had already served under the section 504
disability. For the reasons described below, we reject all
of Hughes’ arguments.

Hughes argues that imposition of a _ thirteen-year
disability for his conduct with regard to counts thirty-six
and thirty-seven represents an ex post facto imposition
of punishment because the statutory disability for this
conduct was enacted subsequent to the occurrence of
Hughes’ criminal behavior. The government responds
that this issue is controlled by Supreme Court case law
that holds that legislative restrictions on convicted
felons that are enacted as a means of preventing
corruption in areas subject to governmental regulation
are not ex post facto laws even if applied retrospectively.
Thus, according to the government, the provisions in
section 504(a) do not constitute criminal ‘‘punishment.”’

The sequence of events is undisputed. Hughes was
convicted in November, 1987, under counts thirty-six
and thirty-seven for violating 18 U.S.C. $1001, which
prohibits falsification of information given to
government agencies. This conviction was based on
conduct undertaken by Hughes while he worked at the
Communication Workers of America in 1982 and 1983.
At the time of Hughes’ criminal activity, the Labor
Management Reporting and Disclosure Act of 1959
imposed disabilities on persons convicted of certain
criminal offenses by preventing them from engaging in
union activities; however, in 1982 and 1983, section 1001
offenses were not among the listed offenses giving rise to
section 504(a) disability. See 29 U.S.C.A. $504. In 1984,

CC

A9

Congress amended section 504(a) and increased the
number of offenses that give rise to disability, including
section 1001 violations. The amendment, which became
effective on October 12, 1984, applies to any judgment or
conviction entered after October 12, 1984,
notwithstanding the date of the conduct that constituted
the event. Hughes was convicted and sentenced in 1987.

We must ascertain whether or not this legislation
represents the retroactive application of punishment or,
indeed, is merely a_ legislative device aimed at
strengthening regulations in an area susceptible to
corruption. Hughes does not dispute that the statutory
language of amended section 504(a) clearly permits
application of the disability provision to his conduct in
1982 and 1983. However, Hughes argues that the
statute, as applied, constitutes an ex post facto law.

We would begin by noting that the Supreme Court
has held similar forms of legislation to be non-penal in
nature. In De Veau v. Braisted, 363 U.S. 144 (1960), the
Supreme Court upheld the constitutionality of the New
York Waterfront Commission Act of 1953. This act
prohibited union officers and agents who had been
convicted of a felony from collecting union dues or other
funds from union employees. Even though the Supreme
Court found the act disqualified convicted felons from
union office, id. at 157-58, it held that barring convicted
felons from certain employments was a_ familiar
legislative device to ensure against corruption in
specified, vital areas. Jd. at 158-59. In_ specifically
addressing the ex post facto challenge to the act, the
Court stated:

The mark of an ex post facto law is the imposition of
what can fairly be designated punishment for past
acts. The question in each case where unpleasant

Al0

consequences are brought to bear upon an individual
for prior conduct, is whether the legislative aim was
to punish that individual for past activity, or
whether the restriction of the individual comes about
as a relevant incident to a regulation of _ present
situation, such as the proper qualifications for a
profession.
/d. at 160 (emphasis added). According to the Court, the
purpose of the statute was not to punish ex-felons but to
regulate the waterfront and, therefore, the statute was
not an ex post facto law. See also Hawker v. New York,
170 U.S. 89 (1898) ‘:pholding New York statute making
it a misdemeanor for anyone convicted of a felony to
practice medicine). Similarly, in Fleming v. Nestor, 363
U.S. 603, 613 (1960), the Court held that

[w]here the source of legislative concern can be
thought to be the activity or status from which the
individual is barred, the disqualification is not
punishment even though it may bear harshly upon
one affected.

One circuit court has addressed and rejected an ex post
facto challenge to section 504(a). See Postma v. Inter.
Bro. of Teamsters, 337 F.2d 609 (2d Cir. 1964) (upholding
retroactive imposition of disability in the 1959 version of
section 504). The Second Circuit in Postma found the
Supreme Court rationale in De Veau completely
controlled any ex post facto analysis. We agree with the
Second Circuit’s rationale. The 1984 amendment to
section 504(a), which simply expands the list of criminal
statutes subject to section 504(a)’s disability provisions,
does not change the propriety of the Postma analysis.

Hughes argues, however, that United States uv.
Brown, 381 U.S. 437 (1965) is direct precedent in support
of his proposition that section 504(a)’s disability is penal
in nature. In Brown, the Supreme Court found that a

All

portion of section 504, which made it a criminal act for a
member of the communist party to serve as an officer or
employee of a labor union, acted as a bill of attainder by
inflicting punishment without trial on such persons. /d.
at 448-49. To support his claim that the section 504(a)
disability is a form of punishment, Hughes points to the
Court's statement that ‘‘section 504 inflicts ‘punishment’
within the meaning of the Bill of Attainder Clause.”’ Id.
at 457 (emphasis added). Hughes argues that this
statement renders the application of section 504(a) in his
case unconstitutional as an ex post facto imposition of
punishment.

We find the Brown opinion distinguishable from the
case before us. Brown was written during a unique and
dark period of our political history, when irrational fears
of ‘‘subversives”’ in our society had reached a fever-pitch.
The Court’s analysis in Brown was pointedly aimed at
remedying the legislative hysteria of the preceding
decade, which had culminated in legislation explicitly
targeting communists. Further, the Brown opinion
addressed the Bill of Attainder Clause and was not
intended as a disposition of an ex post facto challenge to
this provision. Given the Court’s holding only five years
earlier in De Veau, 363 U.S. at 155-58, where it discussed
section 504 at some length and did not fault its
application to convicted felons, we find it would be ill-
advised to extend Brown so as to essentially overturn De
Veau.

As a final matter, we note that congressional history
supports our determination that section 504(a)'s
disability provision is not an ex post facto imposition of
punishment, as applied to convicted felons. In Brown,
the Court found that Congress’s sole intent in
promulgating section 504’s anti-communist provision was

Al2

“to purge the governing boards of labor unions of those
whom Congress regard[ed] as guilty of subversive acts
and associations.’ Brown, 381 U.S. at 460. In contrast,
the congressional history for section 504, as it applies to
convicted felons, indicates that members of Congress
designed the provision based on a rational desire to
protect union members and the public interest from
further meddling by union officials who have been
convicted for certain conduct. See 129 Cong. Rec. 16367-
70, Statement of Senator Hatch (purpose of the new
provision was not to inflict new punishment but rather
to bring relief to the union membership from harm
caused by convicted officials); 129 Cong. Rec. 16372,
Statement of Senator Nunn (Act does not impose
punishment for past criminal conduct and, based on De
Veau and Postma, is on “firm and _ constitutional
ground’’).

After examining the intent of Congress, the language
of the act, and the act’s application, we find that the
disability imposed on Hughes is not an ex post facto
imposition of punishment. Because we do not consider
the disability imposed on Hughes to be penal in nature,
we affirm the district court.

Hughes argues that the Double Jeopardy Clause of
the Fifth Amendment precludes his conviction under
count thirty-six because the same conduct formed the
basis for his conviction under count thirty-four. The
government responds that the separate sentences
imposed on Hughes for his conviction under counts
thirty-four and thirty-six should not be overturned
because (1) the submission of a false 1982 W-2 form to
the IRS. which is the basis of count thirty-four, is a
different offense from the submission of false LM-2
report to the Department of Labor, which is the basis of

Al3

count thirty-six; and (2) we may refuse to consider the
double jeopardy claim under the concurrent sentencing
doctrine.

As an initial matter, we agree with the government
that the concurrent sentencing doctrine, which is a
discretionary doctrine, applies. See Dale v. Haeberlin,
878 F.2d 930, 935 n.3 (6th Cir. 1989). A court should
exercise its discretion not to review an issue where it is
clear that there is no collateral consequence to the
defendant and the issue does not otherwise involve a
significant question meriting consideration. Jd. Hughes
is properly subject to the same probationary period and
the same section 504(a) union disability for counts thirty-
six and thirty-seven. Therefore, because there is no likely
collateral consequence to Hughes of being sentenced on
both counts, we find no significant legal issue to compel
our attention.

We also note that Hughes’ claim fails on substantive
grounds as well. Hughes argues that 26 U.S.C. §7204
constitutes a lesser included offense of 18 U.S.C. §1001.
Section 7204 reads in pertinent part as follows:

[AJny person required under the provisions of
section 6051 [which requires employers to provide
W-2 forms to employees] to furnish a statement who
willfully furnishes a false or fraudulent statement or
who fails to furnish a statement [violates this
provision] ....

Section 1001 provides in pertinent part as follows:

Whoever, in any matter within the jurisdiction of
any department or agency of the United States
knowing!y and willfully ... makes any false,
fictitious or fraudulent statements. or
representations [violates this provision] ....

Al4

We do not consider the language of section 1001 as
precluding a simultaneous conviction for a_ violation
under section 7204. While the statutes could be
construed as having some overlap, this is not problematic.
Here, the prosecution under section 7204 stems from the
filing of a false W-2 form, while the prosecution under
section 1001 derives from the filing of falsified ‘‘LM-2”’
reports. These are separate courses of conduct for which
separate and discrete sanctions and punishment are
applicable. The recent Supreme Court decision of Grady
v. Corbin, 110 S. Ct. 2084 (1990), expressly permits the
government to prosecute a defendant for multiple
offenses in a single proceeding. See also United States v.
Louisville Edible Oil Products, 926 F.2d 584, 588 (6th
Cir. 1991); United States v. Sammons, 918 F.2d 592, 604-
605 n.21 (6th Cir. 1990). In Edible Oil, we emphasized
that the Blockburger test requires a determination of
‘whether each provision requires proof of an additional
fact which the other does not.”’ 926 F.2d at 588 (citing
Blockburger v. United States, 284 U.S. 299, 304 (1932)).
Grady does not mitigate our application of the
Blockburger analysis.

Hughes was convicted under count thirty-four for
aiding and assisting in the submission of a false W-2
form, in violation of 26 U.S.C. §7206(2). Hughes’
conviction under count thirty-six of the indictment arose
from his violation of 18 U.S.C. §1001. Under count
thirty-four, the jury found that Hughes, on behalf of
Communication Workers of America, had submitted a
false W-2 form to the Internal Revenue Service. Under
count thirty-six, the jury found that Hughes had caused
the Communication Workers of America, in a matter
within the jurisdiction of the United States Department
of Labor, to submit a false labor report to the

Ald

Department of Labor. These are distinct proofs of two
separate courses of conduct and_ simultaneous
convictions for both courses of conduct do not violate
Hughes’ constitutional rights.

Hughes argues that his First Amendment right to
associate is violated by the district court's order that he
not exercise “‘any decision-making authority over any
organization, committee, or account that receives any of
its funds from a labor organization and/or its members
for the purposes of contributing money to political
candidates.’’ The government responds that the district
court is simply exercising its discretion in imposing this
condition.

Section 504(a)(5) expressly authorizes the district
court to enter an order preventing convicted persons
such as Hughes from serving, for up to thirteen years,

in any capacity, other than in his capacity as a
member of such labor organization, that involves
decision-making authority concerning or decision-
making authority over, or custody of, or control of
the moneys, funds, assets, or property of any labor
organization ....

A trial court has broad discretion in determining the
conditions of probation and on appellate review is
subject to reversal only for abuse of discretion. See
United States v. Peete, 919 F.2d 1168, 1181 (6th Cir.
1990). A district court may include conditions that
restrict fundamental rights, such as freedom of speech
and freedom of association, although in such cases we
must review the restrictions with particular care. Jd. In
Peete, we found that ‘‘[pjrobation restrictions may affect
fundamental rights such as freedom of speech and
freedom of association if the conditions are primarily
designed to meet the ends of rehabilitation and protect
the public.” Jd.

a

Al6

We find that the restriction on Hughes’ authority
over union-financed political action committees was
reasonably fashioned by the district court to protect
union members and the general public from continued
abuses by Hughes. An incidental effect of this restriction
is that it will also rehabilitate Hughes by removing him
from the environment that originally led to his criminal
activity. The district court, in crafting a disability order
unique to Hughes, has not exceeded the bounds defined
in section 504(a)(5). Admittedly, Hughes’ ability to
exercise his right to associate with political action
committees and to participate in an activity in which
union members have contributed in their individual
capacities is limited by the court’s order. However, we
find this limitation on Hughes’ First Amendment rights
to be necessary when balanced against the right of the
community to have uncorrupted unionfinancing of
political action committees. Hughes’ conduct following
his first sentencing clearly demonstrates that he is still a
threat to the public in this regard.

Finally, Hughes argues the district court did not
fully credit him for the amount of disability he had
already served under section 504(a) since the time of his
first sentencing. It should be recalled that we granted
Hughes an initial stay of the imposition of this disability
on January 13,-1988. Hughes claims he should receive
additional credit for time served under the disability,
accruing as of April 4, 1990, when our decision on
Hughes’ first appeal was entered. Hughes argues that
our June 12, 1990 order, which continued the original
stay while he petitioned for certiorari, applied only to his
exercise of civil rights under Ohio state law. Hughes
claims that this second order, by implication, caused the
resumption of federal disabilities against him.

Al7

We reject Hughes’ argument that our second stay
caused his federal disability period to resume. We find
that the section 504(a) disability did not begin to run
again until December 5, 1990, which is the date we
issued the mandate to the district court ordering re-
sentencing. Our memorandum and response to the
second stay request stated:

[A] stay of civil and employment disability had been

entered by the United States Court of Appeals for

the Sixth Circuit prior to the decision in this action

.... It is requested that the terms of this stay be

reinstated pending appeal to the United States

Supreme Court. [italics added]

Nothing in this order limited the effect of the original
stay or called for the resumption of the federal disability
against Hughes.

For the foregoing reasons, we affirm the judgment of
the district court.

Al8
MEMORANDUM AND ORDER OF THE UNITED
STATES DISTRICT COURT
(Filed September 5, 1991)
Case No. CR 86-98

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

UNITED STATES OF AMERICA,
Plaintiff,

VS.

MARTIN J. HUGHES,
Defendant.

ALDRICH, J.
MEMORANDUM AND ORDER

On August 1, 1991, this Court sentenced Martin J.
Hughes to five (5) years probation for two reinstated
felony convictions under 18 U.S.C. §1001. In addition,
the Court ordered Hughes to pay the $10,000 fine
already imposed, and declined to reduce the thirteen year
civil and employment disability automatically imposed
by 29 U.S.C. §504. Hughes has moved for a stay of this
sentence and a clarification of its terms. The Court
denies Hughes’ request for a stay and his request for a
clarification in its entirety, except for two alterations of
his sentence, reducing the probationary period by two (2)
years and the disability period by nine (9) months and
twenty-six (26) days.

Alg

I.

On August 1, 1991, this Court sentenced Hughes to
serve five (5) years on probation for his convictions under
counts 36 and 37. Hughes had already served two years
probation for his conviction under counts 33 and 34 of
the indictment. Under the federal probation statute, 18
U.S.C. §3651. the Court is barred from imposing
consecutive terms of probation totaling more than five
years on separate counts of one indictment. See United
States v. Deffes, 874 F.2d 1501, 1502 (11th Cir. 1989):
see also United States v. Albano, 698 F.2d 144, 146 (2nd
Cir. 1983); Fox v. United States, 354 F.2d 752, 753-54
(10th Cir. 1965). Accordingly, this Court amends its
sentencing order of August 1, 1991 and places Hughes
on probation for three (3) years for his convictions under
18 U.S.C. §1001.'

In addition, the Court amends its sentencing order to
properly credit Hughes for time already served under the
thirteen-year civil and employment disability
automatically imposed by 29 U.S.C. §504. The disability
first went into effect on November 13, 1987 when the
Court originally sentenced Hughes in this case. On
January 13, 1988, the Court of Appeals stayed the
imposition of the disability pending appeal. On December
9, 1990, this Court received the mandate of the Court of
Appeals, ending the appeals process. The government
concedes that Hughes should receive credit for being

‘ Hughes is not entitled to any further reductions in his probationary
period or a dismissal of charges based on a violation of the double
jeopardy clause, as provided for by Grady v. Corbin, .. U.S.
110 S.Ct. 2084. Grady bars successive prosecutions for

different offenses involving the same conduct. Grady expressly
permits the government to prosecute a defendant for multiple
offenses in a single proceeding, “thereby avoiding this double
jeopardy question.’ Grady, 110 S.Ct. at 2095: U.S. v. Louisville
Edible Oil Products, 926 F.2d 584, 588 (6th Cir. 1991).

A29

subject to the disability since December 5, 1990, a period
of seven (7) months and_ twenty-six (26) days.
Accordingly, this Court amends its sentencing order of
August 1, 1991 and reduces Hughes’ thirteen-year civil
and employment disability automatically imposed by 29
U.S.C. §504 by the nine (9) months and twenty-six (26)
days already served when the stay was not in effect.

Il.

In sum, the Court denies Hughes’ request for a stay
and a clarification of the terms of sentence in its
entirety, except for two modifications of the August lst
order. The Court orders that:

(1) Hughes shall be placed on probation for three (3)
years for each conviction under 18 U.S.C. §1001 to run
concurrently with each other;

(2) the thirteen-year civil and employment disability
automatically imposed by 29 U.S.C. $504 shall not be
reduced, except for the period of nine (9) months and
twenty-six (26) days already served.

IT IS SO ORDERED.

/s/ ANN ALDRICH
United States District Judge

A21

MEMORANDUM AND ORDER OF THE UNITED
STATES DISTRICT COURT

(Filed August 1, 1991)
Case No. 86-98
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

UNITED STATES OF AMERICA,
Plaintiff,

VS.

MARTIN J. HUGHES,
Defendant.

ALDRICH, J.
MEMORANDUM AND ORDER

Martin J. Hughes appears before this Court for re-
sentencing, following an appeal of his criminal conviction
to the United States Court of Appeals for the Sixth
Circuit. On appeal, the Sixth Circuit reinstated two
felony convictions, reduced one felony conviction to a
misdemeanor conviction, and remanded the case back to
this Court with instructions to re-sentence accordingly.
A two-day hearing was held to hear evidence pertaining
to an appropriate new sentence.

A22

:

On May 6, 1986, the grand jury issued a thirty-seven
count indictment against Martin J. Hughes who was
then District 4 vice-president for the Communication
Workers of America (‘“‘CWA’’). The indictment alleged
that Hughes submitted to the CWA International office
in Washington expense vouchers that falsely claimed
reimbursement for mileage and meal expenses for union
employees. The government alleged that Hughes
received nearly $400,000 in reimbursement funds from
the CWA International and used those funds to make
political contributions and pay salaries at the United
Telephone Credit Union (‘““UTCU’)).

In July, 1987, Hughes was tried on these charges,
and a jury found him guilty on ten misdemeanor counts
of falsifying union records, in violation of 29 U.S.C.
§439(c); two felony counts, Counts 33 and 34 of the
indictment, of aiding and assisting in the filing of false
income tax returns, in violation of 26 U.S.C. $7206(2);
and two felony counts, Counts 36 and 37, for making
false statements to the United States government
through the submission of false labor reporting
documents, in violation of 18 U.S.C. $1001.

After the jury returned its verdict, this Court
acquitted Hughes of the felony charges in Counts 36 and
37, finding as a matter of law that the false statements
made by Hughes were not material. This Court also
reduced Hughes’ felony conviction under 26 U.S.C.
§7206(2) to the lesser included misdemeanor under 26
U.S.C. $7204 in Count 33.

At the original sentencing hearing, held on
November 13, 1987, this Court sentenced Hughes to two
years probation for each of Counts 33 and 34, to run

A23

concurrently with each other and fined him $10,000, the
sum of $1,000 for each of the ten counts of falsifying
union records. Moreover, the Court reduced from thirteen
years to three years the civil and employment disability
automatically imposed by 29 U.S.C. $504 barring Mr.
Hughes from representing or serving as an officer in his
union.

Both parties appealed to the Sixth Circuit. Pending
this appeal, this Court stayed the imposition of the fine.
Two months later, on January 13, 1988, imposition of the
disability was also stayed by the Sixth Circuit. On
appeal, the Sixth Circuit affirmed the conviction and the
sentence in its entirety except for two modifications.
First, the Circuit ordered that the felony convictions for
Counts 36 and 37 be reinstated. Second, the Circuit
ordered that the felony conviction for Count 34 be
reduced to a misdemeanor. The Circuit then remanded
the case back to this Court with instructions to
resentence Mr. Hughes accordingly. See U.S. v. Hughes,
899 F.2d 1495 (6th Cir. 1990).

Il.

For two days, this Court has heard evidence
regarding Hughes’ conduct since his original sentencing
in 1987. This evidence has a bearing on the efficacy of
any sentence to be imposed. See North Carolina v.
Pearce, 395 U.S. 711, 723 (1969). Based on the evidence
heard, the Court now makes the following findings of
fact.

Three days after his original sentencing, Hughes was
dismissed as vice-president of CWA District IV, and
replaced by Robert Johnson. Despite this dismissal,
Hughes continued to exert control over CWA by
maintaining his old office, giving orders to CWA

A24

secretaries, and controlling funds without authorization.
The government has presented evidence establishing
that Hughes remained in his offices through the summer
of 1988, and only left after the union ordered him to
leave. Afterwards, the union changed the locks on his
doors. Moreover, the government presented evidence
establisning that Hughes has exercised unlawful control
over union funds in three different accounts, the Ohio
Telephone Education Committee (““OTEC’’) account, the
Sundry Disbursements Records (‘‘SDR’’) account, and
the Ohio Action Committee (‘“‘OAC’’) account.

1. The OTEC account

On January 17, 1988, four days after his disability
was stayed, Hughes began to make withdrawals from the
OTEC account without authorization. In total, Hughes
withdrew over $482,000 from the account and placed the
money in a new account for the Ohio Telephone
Education Committee—Public Employees (““OTEC-PE’’).

OTEC is a political action committee designed to
collect funds from union members and distribute them to
political candidates. The committee was established in
1957 by the local offices of CWA to fund candidates
opposed to right-to-work laws. At that time, Hughes was
appointed to run OTEC. The major source of OTEC’s
funds come from individual CWA members in District
IV who designated that a percentage of their dues be
disbursed to that account. The funds are collected by the
CWA International office, and then sent back to CWA
District IV to be deposited in the OTEC account. Before
November 1987, Hughes made all the major decisions
over the disbursement of OTEC funds to candidates.
Since 1985, Peggy Kaufman, a part-time employee at

A25

District IV, acted as the bookkeeper for the OTEC
account with sole authorization to sign checks on the
account.

Normally, OTEC had only a few thousand dollars in
its account. However, in 1986, CWA Local 4389, whose
offices were located at the District IV office, decided to
disband and contribute all of its funds to OTEC. While
not an officer of the local, Hughes took part in the local’s
officers’ meetings and advised them to make this
decision. Kaufman, who was also the treasurer of Local
4389, testified that this money was to be earmarked for
the purpose of organizing public employees. See
Government Exhibit 1-3. In fact, Kaufman stated that,
in the summer of 1987, Hughes discussed with her the
possibility of applying for a federal tax identification
number for a new political action committee, the Ohio
Telephone Education Committee—Public Employees.
However, no federal identification number was ever
applied for or granted. In total, Local 4389 contributed
$480,930.64 to OTEC and these funds were deposited in
the OTEC account.

OTEC’s bank records reveal a steady stream of
contributions to political candidates during the fall of
1987. As of November 16, 1987, the date of Hughes’
conviction, all activity on the account stopped. On
January 17 and 18, 1988, however, Hughes directed
Kaufman to write checks, totaling $480,830.64, from
OTEC to OTEC-PE. On February 24 and 29, 1988, these
checks were the first deposits in a new OTEC-PE
account.

Hughes made additional deposits in the OTEC-PE
account. On January 27, 1988, Hughes directed district
IV secretaries to withdraw $1,741.97 from the CWA
District IV Sundry Disbursement Records (‘SDR’)

A26

account. This check was deposited in the OTEC-PE
account on May 8, 1988. A check for $1,895.00 from the
United Telephone Credit Union (“‘UTCU”’) was deposited
in the account on August 26, 1988. This amount was a
repayment of an amount OTEC-PE paid to UTCU on
June 16, 1988. See Government Exhibit 2. The
government states that this payment was to pay for the
legal fees of Gay Griffith, a UTCU employee.’

When Robert Johnson learned that Hughes directed
the removal of these funds from the OTEC account, he
demanded that Hughes return the money immediately.
Initially, Hughes responded that these funds were under
his control, but he finally agreed that the funds should
be returned to the CWA. It was not until August 1988,
however, that Hughes provided Johnson with checks to
withdraw the entire balance from the OTEC-PE account.
Johnson directed Adrian Sifert, a CWA representative,
to make the withdrawal of funds from the account, but
because Sifert’s name was not on the signature card, he
could not make any withdrawals. See Government
Exhibit 5-3. Sifert then met with Hughes on August 24,
1988 to fill out a signature card and write a check for the
balance. Hughes delayed the repayment again by stating
that he would deliver the signature card and the check to
Johnson at the upcoming CWA convention in New
Orleans. He did not do so, however. Two weeks later, on
September 7, 1988, CWA _ International Secretary-
Treasurer, Jim-~Booe, telegramed Hughes demanding
repayment of the money. See Government Exhibit 7.

‘Hughes had assisted Ms. Griffith with the preparation of false
income tax returns. She was also indicted, but upon the grant of
immunity, testified for the government at Hughes’ triai.

A27

Finally, on September 9, [988, Hughes made
arrangements to have Sifert and Kaufman co-sign a
check, payable to CWA. See Government Exhibit 8.?

Hughes contends that he did not violate the law,
union regulations, or his civil and employment disability
when he withdrew money from the OTEC account. He
contends that the money was under his control as the
appointed manager of OTEC, a position independent
from his position at the union. He points to O.R.C.
$3517.10 as authority for the proposition that political
action committees are legally separate from unions.
Hughes asserts that his appointment as the managing
officer of OTEC occurred in 1957 when the organization
was formed. He asserts that he never lost this authority,
and continues to be the managing officer of OTEC to
this day.

Nevertheless, the evidence overwhelmingly
demonstrates that upon his dismissal as vice-president of
district IV, Hughes lost his authority over OTEC when
he resigned from his position at the union. In fact, the
evidence clearly establishes that since that resignation,
Robert Johnson and his assistant, Jeff Rechenbach, have
assumed full control of OTEC and its disbursements.
Since 1988, Rechenbach has made all of the
disbursement decisions regarding OTEC funds (except
for the OTEC-PE withdrawals). He has filed all the
reporting documents with the Secretary of State. He has
even changed the organization’s name. Rechenbach has
made all of these decisions lawfully, and without ever
consulting Hughes or gaining Hughes’ permission.

* The funds were never returned to the OTEC account, however. The
union decided that, pursuant to union regulations, Local 4389's funds
should be disbursed to the locals that took over its jurisdiction after
it disbanded.

—

i)
ALS

In addition, there is evidence that CWA's
international office no longer recognizes Hughes as the
managing officer of OTEC. When it sends collected funds
to OTEC, it sends them to Johnson, not Hughes. See
Government Exhibit 9 (a letter from James Booe, CWA
International Secretary-Treasurer to Robert Johnson
disbursing funds to District IV for OTEC). Moreover, it
is clear that Hughes himself recognizes that he is no
longer in control of OTEC. After his departure, Hughes
asked Johnson if he could continue to have a hand in
disbursement decisions. When asked for the money,
Hughes very quickly acknowledged that he did not have
the authority to control those funds, and should return
them .o CWA. Therefore, there is no basis for Hughes’
contention that he retained authority over OTEC funds
after his dismissal as CWA vice-president.

2. The SDR account

Most CWA District IV expenses are paid directly by
the CWA International in Washington, D.C. If the
district incurs an expense, it pays it out of its SDR
account, and sends a receipt to the CWA international
office. The international office, then, sends a check
reimbursing the SDR account for that amount.

CWA International advances district IV $3,000 with
which to pay expenses. However, during his tenure,
Hughes would often pay the district's expenses from his
own funds or by the use of his own master card. Sandra
Christy Sorin, Peggy Kaufman, and Bonnie Lustek, who
have all served as bookkeepers for the account, each
testified that Hughes was always reimbursed for these
expenditures, After his dismissal as vice-president,
Hughes approached both Kaufman and Sorin and asked
for a check in excess of the balance above the $3,000

A29

advance. Hughes asserted that this excess balance was
his personal funds. Kaufman and Sorin both told Hughes
that he would need to produce a receipt or bill to
demonstrate that money was owed him. He never did.
Kaufman and Sorin also testified that the account's
excess funds were due to double payments and refunds
from vendors. Apparently, at times, CWA would pay a
vendor twice for the same bill. It would then get
reimbursement for both payments from the Washington
office. When the vendor finally returned the second
payment, District IV would simply keep it in the SDR
account, rather than returning it to the Washington
office.

Shortly after Hughes made his request, the district
stopped receiving account statements for the SDR
account. Kaufman and Sorin checked with the bank and
discovered that Hughes had changed the mailing address
for the account to his own residence. Johnson then closed
the account and moved the funds into a new account at a
different bank.

3. The OAC account

In early 1989, the CWA District IV office received
two IRS forms 1099 from the United Telephone Credit
Union for interest on two CWA accounts, the CWA
Education Training Fund and the Ohio Action
Committee. See Government Exhibit 11. The funds were
identified by CWA's federal tax number. Upon receipt of
the forms, Johnson requested that the accounts be
closed. UTCU issued checks for $2,703.48 for the ETF
account and $16,524.87 for the OAC account. On March
6, 1989, when CWA attempted to cash these checks, it
discovered that a stop payment order had been placed on
the check from the OAC account.

A30

Johnson immediately confronted Hughes about the
stop payment because the account had previously been
under his control. Hughes responded that the money in
the OAC account was his, and not the union's. On March
9, 1989, James Booe wrote Gay Griffith, the manager of
UTCU, inquiring about the stop payment and demanding
full payment of the balance in the OAC account. On
March 15, 1989, Kenneth Seminatore, counsel for UTCU,
wrote Booe to state that the UTCU believed that the
funds in the OAC account were not CWA'’s, but was a
credit union account. Seminatore was told this by
Hughes.

The evidence established, however, that the funds in
the OAC account were union funds. The account was
first begun in December, 1979 with a deposit of
$9,900.49. Not so coincidentally, in December, 1979, an
account with the name CWA District 4 Action account
was closed with a final balance of $9,901.49. Thus, the
Court finds that the funds in the OAC account were
union funds, and Hughes and UTCU should not have
placed a stop payment order on the OAC checks.

III.

Because Hughes’ offenses were committed prior to
the Sentencing Reform Act of 1984, this Court has broad
discretion in which to fashion a new _ sentence.
Essentially, this Court must modify Hughes’ sentence to
take into account two additional felony convictions for
violations of 18 U.S.C. §1001 and a misdemeanor
conviction for a violation of 26 U.S.C. §7204 that has
been reduced from a felony. In considering the
appropriateness of the new sentence, this Court will take
into account Hughes’ convicted offenses and his conduct
since the original sentence was imposed.

A3l

First, this Court must sentence Hughes for his
violation of 26 U.S.C. §7204 as contained in Count 34 of
the indictment. Hughes violated $7204 by furnishing
Gay Griffith of UTCU with a false W-2 form. This
statute provides for a penalty of $1,000, one year or
both. In its original sentence, this Court placed Hughes
on probation for two years for a similar misdemeanor
conviction under 26 U.S.C. §7204 contained in Count 33
of the indictment. Accordingly, the Court now imposes
the same sentence, two years on probation, for the
misdemeanor conviction contained in Count 34.

The Court notes, however, that Hughes has already
served two years on probation for his felony conviction
under Count 34. Under North Carolina v. Pearce, 595
U.S. 711, 716 (1969), a punishment already served for an
offense must be fully credited when imposing the
sentence for a new conviction based on the same offense.
Therefore, since Hughes has already served two years on
probation for his conviction under Count 34, the Court
will credit this time against his new sentence, and deem
as already served, the two years of probation he is
ordered to serve for this newly entered conviction.

Second, this Court must sentence Hughes for the
reinstated felony convictions under 18 U.S.C. §1001 as
contained in counts 36 and 37 of the indictment. Section
1001 is a general prohibition against falsifying
information given to government agencies. The jury
found that Hughes violated section 1001 when he caused
the CWA to file false LM-2 reports. These are the annual
reports that unions are required to file disclosing, among
other things, the salary and expenses of each employee
who receives more than $10,000 during the year. The
evidence at the trial demonstrated that the LM-2 reports
filed by CWA in 1982 and 1983 contained false entries

A32

showing Gay Griffith received $7,995 in 1982 and
$10,540 in 1983 as reimbursement for expenses. In fact,
these amounts were paid to Griffith as salary and were
generated by the false expense vouchers filed with the
CWA at the direction of Hughes.

Section 1001 provides for a penalty of up to $10,000,
five years, or both. The government has asked that
Hughes be incarcerated for these felony convictions. The
government has asked for this penalty because it
believes that Hughes poses a threat to his union where
he can potentially undermine existing authority and
interfere with union affairs. Incarceration, however, is
not necessary to alleviate this threat. Hughes has
already proved that he is a good candidate for probation,
and the Court can place conditions on him that keep him
from further interfering with his union or their affairs.
Therefore, this Court suspends Hughes’ sentence and
orders him to be placed on five years of probation for
each count to run concurrently with each other.

The Court notes that Hughes has already served two
years on probation for each of his convictions under
Counts 33 and 34 of the indictment. Hughes asks that
these two years be credited against any new
probationary period imposed under Counts 36 and 37.
However, the crediting required by North Carolina v.
Pearce only applies to circumstances where the
defendant’s original sentence is vacated, and after a new
trial sentenced again for the same offenses. Jd. at 714.
In this case, however, Hughes is being sentenced for two
new offenses, felonies which were not even considered at
the time of his original sentence. The two years of
probation was the penalty imposed for each of Hughes’
convictions under counts 33 and 34. While the count 34
conviction was vacated, the count 33 conviction was

A33

affirmed. Thus, the two year probationary period was
properly served for that offense, and need not be credited
against the new probationary period imposed for new
offenses.

This Court must also consider whether in light of the
two new felony convictions, it is appropriate to reduce
Hughes’ civil and employment disability automatically
imposed by 29 U.S.C. $504 from thirteen years to three
years. 29 U.S.C. $504 provides in pertinent part, that:

No person who ... has been convicted of ... a
violation of subchapter III or IV of this chapter
lincluding, among others, a violation of 29 U.S.C.
$439], any felony involving abuse or misuse of such
person's position or employment in a_ labor
organization ... or a crime in which any of the
foregoing crimes is an element ... shall not serve or
be permitted to serve

(2) as an officer, director, trustee, member of the
executive board or similar governing body,
business agent, manager, organizer, employer, or
representative in any capacity of any labor
organization, or

* * *

(4) in a position which entitles its occupant to a
share of the proceeds of, or as an officer or
administrative employee of, any entity whose
activities are in whole or in substantial part
devoted to providing goods or services to any
labor organization, or

(5) in any capacity other than in his capacity as
a member of such labor organization, that
involves decision-making authority concerning, or
decision-making authority over, or custody of, or
control of the moneys, funds, assets, or property
of any labor organization,

A34

during or for the period of thirteen (13) years after
conviction or after the end of such imprisonment,
whichever is later, unless the sentencing court on
the motion of the person convicted sets a lesser
period of at least three years after such conviction
or after the end of such imprisonment, whichever is
later. ...

The thirteen year disability of $504 is automatically
triggered by Hughes’ conviction under 18 U.S.C. §1001
since it was a ‘‘felony involving the abuse or misuse of
Hughes’ position in a labor organization.’’ The courts
have held that the section should be interpreted liberally
in order to give full effect to the efficacy of its
provisions. See IJllario v. Frawley, 426 F.Supp. 1132,
1137 (D.N.J. 1977); Hodgson v. Chain Service
Restaurant, 355 F.Supp. 180, 184 (S.D.N.Y. 19793).

This Court originally reduced Hughes’ automatic
disability to three years because it believed Hughes was
committed to helping his union. However, in light of
Hughes’ conduct since his sentencing on November 13,
1987, this Court finds that such a reduction is not
appropriate. While Hughes may not have violated his
disability (because it was stayed) when he withdrew
money from OTEC, changed the mailing address for the
SDR account, and stopped payment on the OAC check;
his actions demonstrate a general contempt for the
existing authority of the union. Because Hughes has
been in power at district IV for so long, it is difficult for
the new vice-president, his secretaries and assistants to
run District IV with Hughes around continually
interfering with district funds and operations. In fact, in
order to control Hughes, the district officers have been
forced to bring in higher union officials, like James Booe,
to take action against him. As long as Hughes maintains
some area of control within the union and its affiliated

A35

organizations, he will continue to undermine the existing
authority and interfere with their efforts to run the
CWA.

Section 504 was designed to eradicate this problem.
As other courts have stated, the section is designed to
“purge the labor movement of its criminal element,”’
Illario v. Frawley, 426 F.Supp. at 1137, and prevent
them from ‘‘(re-)gaining control of union government.”
Hodgson, 355 F.Supp. at 183. By continually interfering
with union accounts that undermine existing authority,
Hughes has demonstrated the necessity of leaving in
tact the full thirteen year disability period imposed by
§504 to prevent him from engaging in _ further
interference with union activities.'

Hughes’ statutorily imposed disability was in effect
for two months before it was stayed by the Sixth Circuit
on January 13, 1988. Therefore, two months of the
disability has already been discharged and can be
deducted from this thirteen year period.

Section 504 explicitly bars Hughes from controlling
any union funds, including the SDR and OAC accounts.
However, there remains some question about whether
Section 504 would bar Hughes from controlling the funds
of political action committees. Both parties have
disputed the issue of whether political action committee
funds are tantamount to union funds. Unfortunately,
this Court does not have jurisdiction to solve this
dispute and issue an order enforcing its interpretation of
section 504. The Court does not impose the disability,
and thus cannot issue orders concerning how it is to be

* The court is not sentencing Hughes to this disability for his actions
since the original sentencing. It is merely refusing to reduce a
statutorily-required thirteen year period in order to give full effect to
§504’s provisions.

A36

interpreted and enforced. Under the terms of the statute,
the Court's only role, as the sentencing court, is to
decide whether or not to reduce the statutory disability
period from thirteen to three years. If the government
believes that Hughes is violating his disability by
controlling the funds of political action committees, its
only recourse is to initiate a new and independent
criminal action against Hughes under 29 U.S.C. $504(b),
which imposes a penalty of up to $10,000, five years, or
both for any person who willfully violates this section.
See U.S. v. Jalas, 409 F.2d 358 (7th Cir. 1969).

Nevertheless, this Court believes that Hughes should
be prevented from re-gaining control of political action
committees or any other organizations that receive funds
from unions and/or its members for the purpose of
contributing money to political candidates. Indeed, the
driving force behind Hughes’ illegal actions in this case
was his desire to strengthen and perpetuate his own
personal political power through the control and
disbursement of political action money. Hughes’ actions
in conjunction with the OTEC account demonstrate that
this desire to control political action money and wield
political power remains strong. Therefore, as a condition
of his probation, this Court orders that Hughes may not
exercise any decision-making authority over any
organization, committee, or account that receives any of
its funds from a labor organization and/or its members
for the purpose of contributing money to political
candidates.

Hughes’ remaining convictions—ten counts for
violations of 29 U.S.C. §439 and one count, Count 33 of
the indictment, for violation of 26 U.S.C. §7204—were
affirmed by the Sixth Circvit. Therefore, this Court re-
affirms the sentence previously imposed for these
violations, and notes that the sentence for Count 33 has
already been served.

A37
IV.

In sum, this Court orders the following:

(1) the jury felony convictions for violations of 18
U.S.C. $1001 contained in Counts 36 and 37 of the
indictment are reinstated;

(2) Hughes is placed on probation for five (5) years
for each conviction under 18 U.S.C. §1001 to run
concurrently with each other;

(3) as a special condition of this probation, Hughes
may not exercise any decision-making authority over any
organization, committee, or account that receives any of
its funds from a labor organization and/or its members
for the purpose of contributing money to political
candidates;

(4) Hughes must pay the fine of $10,000 already
imposed under the original sentence for the 29 U.S.C.
$431 convictions, forthwith;

(5) the felony conviction under 26 U.S.C. $7206(2)
contained in Count 34 of the indictment is vacated; in its
place, a misdemeanor conviction under 26 U.S.C. §7204
is entered;

(6) since Hughes has already served a sentence for
the felony conviction under Count 34, no new sentence
will be imposed for the misdemeanor conviction entered
in its place;

(7) the thirteen-year civil and employment disability
automatically imposed by 29 U.S.C. $504 shall not be
reduced, except for the sixty days already served before
the stay.

IT IS SO ORDERED.

/s/ ANN ALDRICH
United States District Judge

—————————

A38

JUDGMENT AND OPINION OF THE
UNITED STATES COURT ©F APPEALS
FOR THE SIXTH CIRCUIT

(Decided and Filed April 4, 1990)

[RECOMMENDED FOR FULL
TEXT PUBLICATION}
See Sixth Circuit Rule 24

NOS. 87-4052, 87-4069 & 87-4125
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

MARTIN J. HUGHES,
Plaintiff-Appellant/
Cross-Appellee
(87-4052 & 87-4125),

Vv.

UNITED STATES OF AMERICA,
Defendant-Appellee/
Cross-Appellant.

On APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO.

A39

UNITED STATES OF AMERICA,
Respondent (87-4069),

Vv.

MARTIN J. HUGHES,

Petitioner.

ON PETITION FOR WRIT OF MANDUMUS

Before BOGGS and NORRIS, Circuit Judges:
ENGEL, Senior Circuit Judge.

ALAN E. NORRIS, Circuit Judge. Defendant,
Martin J. Hughes, appeals from his conviction on twelve
counts of a thirty-seven-count indictment charging him
with various federal criminal offenses. The government
also appeals the district court's decisions acquitting
defendant on two of the counts and reducing his
conviction to a lesser included offense on another count.
For the reasons stated below, we affirm the district
court’s judgment in part and reverse in part.

On May 6, 1986, the grand jury issued a thirty-
seven-count indictment against defendant, a district vice-
president for the Communications Workers of America,
AFL-CIO (“CWA”), charging him with mail fraud,
embezzlement, falsification of union records, aiding and
assisting in the filing of false W-2 and W-3 forms with
the Internal Revenue Service (‘IRS’), and with making
false statements to the United States through the
submission of falsified labor reporting documents. The

A40

government alleged that defendant submitted to the
CWA International office expense vouchers that falsely
claimed reimbursement for mileage and meal expenses
for union employees. The government alleged that
defendant received nearly $400,000 in reimbursement
funds from the CWA International and used those funds
to make political contributions and to pay salaries at the
United Telephone Credit Union (““‘UTCU’”’).

Specifically, the government charged defendant in
Counts 1 through 6 and Counts 19 through 23 with mail
fraud, in violation of 18 U.S.C. $1341. Counts 7 through
12 and Counts 24 through 28 charged defendant with
embezzlement, in violation of 29 U.S.C. §501(c). Counts
13 through 18 and Counts 29 through 32 charged
defendant with falsification of union records, in violation
of 29 U.S.C. §439%c). Counts 33 through 35 charged
defendant with aiding and assisting in the filing of false
W-2 and W-3 forms to the IRS, in violation of 26 U.S.C.
§7206(2). Finally, Counts 36 and 37 charged defendant
with making false statements to the United States
through the submission of false labor reporting
documents, in violation of 18 U.S.C. $1001.

The case proceeded to trial on July 1, 1987. Before
the case was sent to the jury, the district court
dismissed Counts 1 through 12 and Counts 19 through
28, the mail fraud and embezzlement charges. After the
case had been submitted to the jury, the court dismissed
Count 35, one of the tax charges, because of a
typographical mistake in the indictment. The jury
returned guilty verdicts on each of the remaining counts.

Defendant then moved for acquittal on Counts 33,
34, 36, and 37. The court acquitted defendant of the
felony charges in Counts 36 and 37, finding as a matter
of law that false statements made by defendant were not

A4l

material. The court also reduced defendant's conviction
of a felony under 26 U.S.C. §7206(2) to the lesser
included misdemeanor under 26 U.S.C. §7204 in Count
33. The court refused to reduce the felony conviction
under section 7206(2) in Count 34.

Defendant was sentenced to two years’ probation
and fined $10,000.

The government appeals the district court's action in
acquitting defendant on Counts 36 and 37, and reducing
the felony conviction on Count 33.

Defendant appeals the district court’s decisions
denying his motions for acquittal on Count 34, for
recusal, for mistrial, and to dismiss the entire indictment
in light of the holding in McNally v. United States, 483
U.S. 350 (1987).

II.
A. The False Statement Counts Under 18 U.S.C. §1001

The government contends that the district cour’
erred in acquitting defendant on the felony charges
under 18 U.S.C. §1001 in Counts 36 and 37, when it
concluded as a matter of law that false statements made
by defendant were not material.

Section 1001 is a general prohibition against
falsifying information given to government agencies, and
provides:

Whoever, in any matter within the jurisdiction of
any department or agency of the United States
knowingly and willfully falsifies, conceals or covers
up by any trick, scheme, or device a material fact, or
makes any false, fictitious, or fraudulent statements
or representations, or makes or uses any false
writing or document knowing the same to contain

A42

any false, fictitious or fraudulent statement or

entry, shall be fined not more than $10,000 or

imprisoned not more than five years, or both.

Although the statute explicitly mentions materiality
only in the first clause, courts have read such a
requirement into the second clause as well “in order to
exclude trivial falsehoods from the purview of the
statute.’ United States v. Abadi, 706 F.2d 178, 180 (6th
Cir.), cert. denied, 464 U.S. 821 (1983). Under section
1001, a false statement to a federal agency is material
even if it does not actually influence a decision of the
agency, so long as it has a natural tendency to influence
or is capable of influencing a decision of the agency.
United States v. Chandler, 752 F.2d 1148, 1151 (6th Cir.
1985).

However, materiality “is not an element of the
offense that must be proved beyond a reasonable doubt
but a ‘judicially imposed limitation to ensure the
reasonable application of the statute.’ "’ Chandler, 752
F.2d at 1151 (quoting Abadi, 706 F.2d at 180 n.2.).
Accordingly, ‘‘materiality is a question of law for the
court to decide.’’ United States v. Keefer, 799 F.2d 1115,
1126 (6th Cir. 1986). ‘‘A materiality determination is
subject to complete review on appeal and is not
controlled by the ciearly erroneous standard.’ Chandler,
752 F.2d at 1151.

In this case, the jury found that the defendant made
false statements to the Department of Labor when he
caused the CWA to file false LM-2 reports. These are the
annual reports that unions are required to file disclosing,
among other things, the salary and expenses of each
employee who receives more than $10,000 during the
year. See 29 U.S.C. §$431(b)(3). Evidence demonstrated
that the LM-2 reports filed by the CWA for 1982 and

A43

1983 contained false entries showing Gay Griffith, the
manager of UTCU, as a CWA employee who received
$7,995 in 1982 and $10,540 in 1983 as reimbursement for
expenses. In fact, these amounts were paid to Griffith as
salary and were generated by the false expense vouchers
filed with the CWA at the direction of defendant.

The district court found that the false statements
were not material. The district court- took into
consideration that the total amount paid to Griffith was
correctly stated, that the misstated amounts were small
in relation to the union's total expenses, and the
testimony of a labor department official that the chief
purpose for requiring these figures was to call attention
to persons who were being paid by more than one union
and to ‘‘adequately describe” the total amount the union
paid to each employee. The court also relied upon the
fact that the false statements had no effect on any
determinations by the Department of Labor, even
though the court also noted that the government need
not prove such an effect to sustain a conviction under
section 1001. Finally, the court considered the fact that
Congress had also included in the Labor Management
Reporting and Disclosure Act a prohibition against
making material false representations in documents
required by the Act, but provided that a violation would
be punished as a misdemeanor, rather than a felony. 29
U.S.C. $439. The court acknowledged that the United
States Supreme Court, in United States v. Batchelder.
442 U.S. 114 (1979), held that if two separate laws cover
certain criminal activity, the government may prosecute
under either law. However, the district court felt that the
existence of a misdemeanor statute covering the making
of false statements to the Department of Labor was
relevant in determining the issue of materiality.

A44

The district court erred in concluding that the false
statements were immaterial. The statements were clearly
of the type capable of influencing the Department of
Labor's information-gathering and regulatory decision-
making process. Since Congress specifically required a
union to disclose the amounts it disburses in salary and
reimbursement expenses for each employee who receives
over $10,000, and the LM-2 form provided by the
Department of Labor requires the union to separately
list the amounts given to an employee for salary and for
reimbursed expenses, it follows that a false reporting of
information specifically required to be disclosed is
material.

The fact that the misstated amounts are relatively
small when compared with total union expenditures is
not particularly relevant to the issue of materiality.
Instead, the relevant inquiry is whether the false
information is of the type that is capable of influencing a
decision of an agency, as opposed to an examination of
the magnitude of the falsehood. See United States v.
Norris, 749 F.2d 1116, 1121-22 (4th Cir. 1984) (false
inclusion of $650 in expense statement totalling $35,584
is material), cert. denied, 471 U.S. 1065 (1985). Similarly,
the district court’s reliance upon the fact that Congress
also provided that essentially identical conduct could
also be punished as a misdemeanor is_ misplaced,
especially in view of the court having acknowledged that
‘the false statements do rise to the level of materiality
required”’ to violate the misdemeanor statute. Since the
government may bring a prosecution for making a false
statement to the Department of Labor under either 18
U.S.C. §1001 or 29 U.S.C. §439, see United States v.
Batchelder, 442 U.S. at 123-24, and no different standard
for determining materiality is set out in the statutes,

A45

there is no basis for concluding that a statement that is
material under 29 U.S.C. §439 is not also material under
18 U.S.C. §1001.

Accordingly, we reverse the district court’s decision
acquitting defendant on Counts 36 and 37 of the
indictment. Upon remand, the court is instructed to
reinstate the jury's felony convictions on these Counts.
and to resentence defendant accordingly.

B. The False W-2 and W-3 Forms

The government contends that the district court
erred in reducing defendant's Count 33 felony conviction
under 26 U.S.C. §$7206(2) to a misdemeanor conviction
under 26 U.S.C. §7204. Defendant contends that the
district court erred by refusing to also reduce his felony
conviction in Count 34 to a misdemeanor.

1. Count 33

In Count 33, the government charged defendant with
aiding and assisting in the filing of a false W-3 wage
transmittal form with the IRS. 26 U.S.C. §6051{(a)
provides that an employer who is required to deduct and
withhold taxes from its employees must furnish to each
employee a statement, the W-2 form, that sets forth the
amount of wages the employee earned and the amount
withheld in taxes. 26 U.S.C. §6051(d) provides that the
employer must also file a duplicate of the statement with
the IRS. This duplicate is the W-3 form.

26 U.S.C. $7206(2) provides, in pertinent part, that a
person is guilty of a felony if he

[w]illfully aids or assists in, or procures, counsels, or
advises the preparation or presentation under, or in
connection with any matter arising under, the

A46

internal revenue laws, of a return, affidavit, claim, or
other document, which is fraudulent or is false as to
any material matter, whether or not such falsity or
fraud is with the knowledge or consent of the person
authorized or required to present such return,
affidavit, claim, or document.

26 U.S.C. $7204 provides that:

In lieu of any other penalty provided by law
(except the penalty provided by section 6674) any
person required under the provisions of section 6051
to furnish a statement who willfully furnishes a false
or fraudulent statement or who willfully fails to
furnish a statement in the manner, at the time, and
showing the information required under section
6051, or regulations prescribed thereunder, shall, for
each such offense, upon conviction thereof, be fined
not more than $1,000, or imprisoned not more than
one year, or both. (Emphasis added.)

In reducing defendant’s section 7206 felony
conviction to a section 7204 misdemeanor offense, the
district court concluded that section 7204 provides the
exclusive sanction against an employer for submitting a
false W-3 statement to the IRS and that it was a lesser
included offense of that defined in section 7206.

The government argues that section 7204 deals
exclusively with statements furnished to employees and
does not cover the filing of a false W-3 form with the
IRS, pointing to the language in that section providing
that it is the exclusive sanction for persons who furnish
a statement required to be furnished under section 6051
and that, while section 6051(a) provides that an employer
shall furnish a W-2 to each employee, it provides that the
W-3 statement shall be filed with the IRS.

While we agree with the government that section
7204 clearly is meant to provide the exclusive sanction
for an employer who furnishes an employee with a false

A47

W-2 statement, we do not agree that there is any
linguistic distinction between furnishing and _ filing
statements that compels our adopting its conclusion that
the section does not apply when an empioyer files a false
W-3 form. The W-3 form filed with the IRS is merely a
duplicate of the W-2 statement furnished to the
employee. When an employer furnishes an employee a
false W-2, he necessarily files a false W-3 with the IRS.
Under section 6051, an employer is responsible for both
forms W-2 and W-3. Accordingly, we would render
useless Congress’ intent to punish as a misdemeanant a
person who provides false information on a statement
required by section 6051, if we were to hold that the
government may charge an employer with a felony for
filing a false W-3 form with the IRS.

2. Count 34

In Count 34, the government alleged that defendant
violated section 7206(2) when he did ‘‘willfully aid and
assist in, and procure, counsel and advise the preparation
and presentation to the Internal Revenue Service of a
Form W-2 Wage and Tax Statement for Gay Griffith by
the Communications Workers of America.’’ The district
court held, and the government now concedes, that
defendant could not have violated section 7206(2) merely
by furnishing Griffith with a false W-2 form, since
section 7204 provides the exclusive sanction for this act.
However, the district court also found that the jury
could have reasonably concluded that defendant took
other steps in counseling Griffith to understate her
income on her tax return and, therefore, the court
refused to reduce defendant’s felony conviction under
section 7206(2).

A48

However, a fair reading of the evidence would not
permit the jury to conclude that defendant took any
action with respect to the filing of Griffith’s tax return
other than causing the CWA to furnish her with a false
W-2 form. Griffith expressly denied that defendant gave
her any advice concerning the filing of her tax return.

Accordingly, we affirm the district court's decision
reducing defendant’s Count 33 felony conviction to a
misdemeanor conviction, and reverse the court's denial of
a similar reduction with respect to Count 34. Upon
remand, the district court is instructed to vacate
defendant's Count 34 felony conviction and to enter a
misdemeanor conviction on that Count and resentence
defendant accordingly.

C. The Recusal Motion

On two occasions, defendant moved for recusal or
disqualification of the district judge, the Honorable Ann
Aldrich. In his motions, defendant filed an affidavit
stating that, at defendant’s request, President Carter
signed the final documents approving the appointment of
the Honorable George White to the bench of the
Northern District of Ohio one day earlier than he signed
Judge Aldrich’s commission, giving Judge White greater
seniority. Judge Aldrich acknowledged that Hughes was
responsible for her ‘‘lesser seniority’’ but, nonetheless,
denied the motions.

Under 28 U.S.C. §§144 and 455, a judge must recuse
herself if a reasonable, objective person, knowing all of
the circumstances, would have questioned the judge’s
impartiality. See Liljeberg v. Health Servs. Acquisition
Corp., 486 U.S. 847, 108 S. Ct. 2194, 2203-05 (1988);
United States v. Story, 716 F.2d 1088, 1090-91 (6th Cir.

A49

1983). Given the marginal nature of the benefits that a
judge receives by having greater seniority, we believe
that, under the circumstances of this case, a reasonable,
objective person, knowing all the circumstances, would
not have questioned Judge Aldrich’s impartiality. The
‘“‘benefits’’ of which Judge Aldrich was supposedly
deprived by her lesser seniority are, in the case at hand,
truly de minimis based upon the evidence presented.
Based upon the large number and pattern of
appointment of judges in the Northern District of Ohio,
it is quite implausible that either Judge White or Judge
Aldrich would ever become chief judge, with whatever
perquisites that might imply. There is not the slightest
hint that whatever precedence has existed in items such
as office selection, etc., has been of any significance
either in fact, or in the estimation of either judge. Thus,
it is quite clear that under the circumstances of this case,
a reasonable, objective person, knowing all the
circumstances, would not have questioned Judge
Aldrich’s impartiality.

Accordingly, we affirm the district court’s decision
denying defendant’s motions for recusal or
disqualification.

D. Defendant's Other Contentions

Defendant also contends that the district court erred
in denying his motion for a mistrial and denying his
motion to dismiss the entire indictment in light of the
holding in McNally v. United States, 483 U.S. 350 (1987).
We believe that defendant’s arguments with respect to
these issues are without merit, and we, therefore, affirm
the district court’s decisions on these remaining issues.

ll

A50
Ii.

For the foregoing reasons, the judgment of the
district court is affirmed in part and reversed in part,
and this cause is remanded for further proceedings
consistent with this opinion.

REFERENCE DATA
Case Name: Hughes v. United States
Case Numbers: 87-4052/4069/4125
Argued: October 6, 1989
Case Below: Ohio D.C. No. CR 86-98 (Aldrich)

Before: Danny J. Boggs and Alan E. Norris, Circuit
Judges; Albert J. Engel, Senior Circuit Judge.

Author: Alan E. Norris, Circuit Judge
Counsel for appellant: Percy Squire, Columbus, OH.

Counsel for appellee: John J. Siegel, Cleveland, OH.

FULL COUNSEL
Percy Squire,* Columbus, Ohio, for appellant.

John J. Siegel,* and Christian Stickan,* Assistant
United States Attorney, Cleveland, Ohio, for appellee.

Merritt C. Deitz, Jr. (Hughes), Sebree, Kentucky, for
appellee.

Michael P. Butler, Assistant Prosecuting Attorney,
Cleveland, Ohio, for amicus curiae.

A5l
MEMORANDUM AND ORDER OF THE
UNITED STATES DISTRICT COURT
(Filed November 13, 1987)
Criminal Action No. CR86-98

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

UNITED STATES OF AMERICA,
Plaintiff

vs.

MARTIN J. HUGHES,
Defendant.

MEMORANDUM AND ORDER
ALDRICH, J.

Defendant Martin J. Hughes moves for acquittal or
a new trial on counts 33, 34, 36 and 37 of the indictment.
Count 33 relates to the filing of a false W-2 form and
count 34 to the filing of a false W-3 form, both in
violation of 26 U.S.C. §7206(2), counts 36 and 37 relate
to the filing of false LM-2’s with the Department of
Labor. '

'‘ Hughes himself did not file with the government any of the forms in
question. The evidence demonstrated that Hughes, by submitting
false expense vouchers to the CWA, caused the CWA to incorrectly
complete W-2, W-3 and LM-2 forms. The CWA filed the W-3 and LM-
2 forms with the government; the CWA furnished the W-2 forms to
Gay Griffith, who then filed them with the IRS in connection with
her income tax returns.

————

A52

For the reasons set forth below, with respect to
count 33, defendant's motion for acquittal or a new trial
is denied; with respect to count 34, defendant will be
sentenced under $7204 rather than §7206; and with
respect to counts 36 and 37, defendant is acquitted.

I.
A.

Counts 33 and 34

Defendant argues that he should not be convicted
under $§7206(2), because Congress has _ specifically
provided for a lesser penalty in §7204. $7204 states:

In lieu of any other penalty provided by law
(except the penalty provided by section 6674) any
person required under the provisions of section 6051
to furnish a statement who willfully furnishes a false
or fraudulent statement or who willfully fails to
furnish a statement in the manner, at the time, and
showing the information required under section
6051, or regulations prescribed thereunder, shall, for
each such offense, upon conviction thereof, be fined
not more than $1,000, or imprisoned not more than
1 year, or both.

26 U.S.C. $7204 (1982) (emphasis added).
Section $7206 provides:

(2) Aid or assistance.—[Any person who]
[w]illfully aids or assists in, or procures, counsels, or
advises the preparation or presentation under, or in
connection with any matter arising under, the
internal revenue laws, of a return, affidavit, claim, or

other document, which is fraudulent or is false as to
any material matter, whether or not such falsity or
fraud is with the knowledge or consent of the person
authorized or required to present such return,
affidavit, claim, or document.

A53

shall be guilty of a felony and, upon conviction

‘thereof, shall be fined not more than $5,000, or

imprisoned not more than 3 years, or both, together

with the costs of prosecution.

The government contends, in part, that §7204
applies only to the offense of furnishing a false W-2 to an
employee, and that $7206 may still apply to the separate
offense of assisting a person to file a false W-2 with the
IRS. In addition, the government contends that §7204
applies only to W-2’s and not to W-3’s; so that
defendant's motion as to count 34 is not well taken.

In order to fully understand the scope of §7204, it is
necessary to trace its history, and the history of the
sections to which it relates. Section 7204 was originally
enacted in 1942 as $470 of the Internal Revenue Code of
1939. An identical provision was enacted in 1943 as
§1626(a), and in 1949 was moved to §1643(a).

Congress passed the Revenue Act of 1942 to help
fund the war effort. 56 Stat. 798. As part of this act,
Congress provided for a ‘Victory tax,”’ a 5% tax on the
gross incomes of most employees. §172 et seg. of the
Act; 26 U.S.C. §450 et seq. For the first time, this tax
was to be collected as wages were earned, rather than in
March of the following year, and employers were to be
responsible for the collection.

The legislative history of §470 is not extensive, as
Congress was more concerned about the severity of the
tax and about other matters relating to the war. The
Committee reports of both houses of Congress state that
the penalties imposed by §470 ‘‘are prescribed in lieu of

A54

the penalty imposed by $145? of the Code [which relates
io the filing of false returns generally] and are much less
severe than those displaced.’ H.R. Rep. No. 2333, 77th
Cong., 2d Sess., at 132 (1942); S. Rep. No. 1631, 77th
Cong., 2d Sess., at 172 (1942). Section 145’s monetary
penalty was harsher than that of §7206, but its
imprisonment penalty was less, and a violation of §145
was only a misdemeanor, while a violation of §7206 is a
felony. Thus it can be fairly said that §7206, the
provision in question, is harsher than $145, the provision
which Congress in 1942 wished to preempt.

In 1943, Congress amended the tax code to provide
for full withholding by employers, the system which
exists today. 57 Stat. 126. Congress enacted $1626 to
provide the same penalties for violating the general
withholding provisions as were applicable to the victory
tax withholding provisions. Both houses noted that the
new sections were identical to then existing law. H.R.
Rep. No. 268, 78th Cong., lst Sess., at 24 (1943); S. Rep.
No. 221, 78th Cong., lst Sess., at 31.

. Section 145(a) provided:

(a) Failure to file returns, submit information, or pay tax.
Any person required under this chapter to pay any estimated
tax or tax, or required by law or regulations made under
authority thereof to make a return or declaration, keep any
records, or supply any information, for the purposes of the
computation, assessment, or collection of any estimated tax or
tax imposed by this chapter, who willfully fails to pay such
estimated tax or tax, make such return or declaration, keep
such records, or supply such information, at the time or times
required by law or regulations, shall, in addition to other
penalties provided by law, be guilty of a misdemeanor and, upon
conviction thereof, be fined not more than $10,000, or
imprisoned for not more than one year, or both, together with
the costs of prosecution.

A55

Congress also added section $1626(d), which provided
that employees shall be liable for criminal penalties if
they submit a false withholding form to their employers.
Section 1626(d) is the present $7205. The House version
of $1626(d) explicitly referred to §145, discussed above.
The Senate amendment moved the section from an
amendment to $470 to a separate subchapter. In doing
so, the Senate noted that it was changing the explicit
reference to §145 in the House version to the current
language, because it was moving the section from
Chapter 1 of the IRS Code to Chapter 9. S. Rep. No. 221,
78th Cong., lst Sess., at 31.

Section 145(a) did not become $7206 in the 1954
recodification of the Code; rather, similar provisions were
enacted as §§7201° and 7203.4 The predecessor of

*§7201. Attempt to evade or defeat tax.

Any person who willfully attempts in any manner to evade
or defeat any tax imposed by this title or the payment thereof
shall, in addition to other penalties provided by law, be guilty of
a felony and, upon conviction thereof, shall be fined not more
than $10,000, or imprisoned not more than 5 years, or both,
together with the costs of prosecution.

‘$7203. Willful failure to file return, supply information, or pay tax.

Any person required under this title to pay any estimated
tax or tax, or required by this title or by regulations made
under authority thereof to make a return (other than a return
required under authority of section 6015 or section 6016), keep
any records, or supply any infurmation, who willfully fails to
pay such estimated tax or tax, make such return, keep such
records, or supply such information, at the time or times
required by law or regulations, shall, in addition to other
penalties provided by law, be guilty of a misdemeanor and, upon
conviction thereof, shall be fined not more than $10,000, or
imprisoned not more than 1 year, or both, together with the
costs of prosecution.

‘ |

A56

§7206(2) was §3793(b)* which, except for minor
differences, is identical to $7206(2), and was contained in
Chapter 38, entitled ‘‘Miscellaneous Provisions.’’ Section
3793(b) was part of the 1939 Code, having been enacted
in 1926. Thus, it can be fairly presumed that Congress
intended §3793(b) to be one of the penalties which
$1626(a) would be ‘‘in lieu of.”

The government argues that to hold that only the
filing of a false return can support a $7206(2) violation
ignores a long line of “10 percenter’’ cases,* where
individuals were convicted under $7206(2) for
fraudulently filing a form 1099/W-2G. What the
government misses is that there is no counterpart to
$7204 for a form 1099. No provision of the IRS Code
specifies a penalty, in lieu of all others, tu be applied for
fraudulently completing a form 1099. The Court does not
hold that §7206(2) is limited to the filing of an income
tax return; rather, it holds only that the ‘‘in lieu of any
other penalty under law’ provision of §7204 means
exactly what it says.

5 (b) Fraudulent returns, affidavits, and claims

(1) Assistance in preparation or presentation. Any person
who willfully aids or assists in, or procures, counsels, or advises
the preparation or presentation under, or in connection with any
matter arising under, the internal reveaue laws, of a false or
fraudulent return, affidavit, claim, or document, shall (whether
or not such falsity or fraud is with the knowledge or consent of
the person authorized or required to present such return,
affidavit, claim, or document) be guilty of a felony, and, upon
conviction thereof, be fined not more than $10,000, or
imprisoned for not more than five years, or both, together with
the costs of prosecution.

*In these cases, an individual agrees to redeem a winning gambling
ticket, usually a racing ticket, for another, in return for 10% of the
winnings. In this way, the true owner of the ticket does not have to
fill out the required Form 1099/W-2G, and, because the IRS would
have no matching record against which to check, is able to easily
understate his income on his tax return.

A57

As the government states, §7205 is a counterpart to
97204. As stated above, $7205 was originally enacted in
1943 as $1626(d), with the identical ‘‘in lieu of” language
found here. Section 7205, however, was recently
amended. In 1984, as part of the Deficit Reduction Act,
Congress deleted the “‘in lieu of’’ language of §7205, and
substituted the words “in addition to any other
penalty.’ 98 Stat. 494. The Senate report states that the
amendment would allow, for example, prosecution under
$7201 for willful evasion of taxes, as well as prosecution
for the filing of a false W-4 under $7205. H.R. Conf. Rep.
No. 861, 98th Cong., 2d Sess., 1001, reprinted in 1984
U.S. Code Cong. & Admin. News 751, 995. That this is a
clear break from prior law is evinced by the fact that
§7201's predecessor was §145, the section under which
the 1943 Congress explicitly did not wish the filing of a
false W-2 to be prosecuted. The 1984 Congress’ attention
was certainly drawn to the “in lieu of’ language.
Although this Court does not give overriding weight to
Congress’ failure to amend §7204 in 1984, at least an
inference can be made that had Congress meant to
abolish the ‘‘in lieu of” language altogether, it could have
done so. Section 7204 is not a section buried in another
part of the Code; it is next to, and a counterpart of,
$7205.’

"The Conference agreement regarding the amendment of §7205 states
that ‘‘No inference should be drawn with respect to the correct
interpretation of prior law on this issue,” thus negating any inference
that this amendment is simply « clarifying amendment, 45 years after
the fact. The report goes on to state, however, that “however, to the
extent that United States v. Williams, 644 F.2d 696 (8th Cir. 1981)
might be considered authority to the contrary, the rationale of that
decision no longer applies.’ The only way to make sense of this last
phrase is that the Conference Committee was saying not that
Williams’ interpretation of prior law was incorrect, but that the
Williams interpretation is overruled by the amendment. In other
words, the amendment is forward-looking only. This comports with

the Senate's statement that the amendment is effective for acts and
failures to act occurring after the date of the amendment.

A58
B.

This, however, does not end the Court's
consideration. There are additional questions relating to
Counts 33 and 34 which must be answered before the
Court can rule on defendant's motion.

Count 33 alleges that Martin Hughes violated
§7206(2) by causing the Communications Workers of
America to file a false W-3 form with the Intermal
Revenue Service. Section 7204 is entitled ‘‘Fraudulent
statement or failure to make statement to employees. ’
Because of that title, the government argues that $7204
covers only W-2 statements furnished to employees, and
not W-3 forms which must be filed with the government.

Section 6051, entitled ‘Receipts for employees’, is
the substantive provision requiring W-2 forms to be
furnished to employees. Subsections (c) and (d) state as
follows:

(c) Additional requirements.—The statements
required to be furnished pursuant to this section in
respect of any renumeration shall be furnished at
such other times, shall contain such other
information, and shall be in such form as the
Secretary may by regulations prescribed. The
statements required under this section shall also
show the proportion of the total amount withheld as
tax under section 3101 which is for financing the
cost of hospital insurance benefits under part A of
title XVIII of the Social Security Act.

(d) Statements to constitute information
returns.—A duplicate of any statement made
pursuant to this section and in accordance with
regulations prescribed by the Secretary shall, when
required by such regulations, be filed with the
Secretary.

A59

The IRS regulations under §6051 require employers
to file W-3 forms; 26 C.F.R. $31.6051-2; and thus the
forms come within the provisions of $7204.

The historical evidence is also clear. In the
Congressional hearings in 1942. the question of
employers submitting copies of their employees receipts
(what are now W-2's) to the IRS was considered. The
consensus in 1942 was that this practice would be too
burdensome on employers. Hence it was decided that full
copies would not be necessary, and that instead.
employers would be required to submit only a form
which summarized the individual receipts (what is now
the W-3). S. Rep. No. 3987, 77th Cong., 2d Sess., at 126
28 (Senate Finance Subcommittee Hearing, “Data
Relating to the Withholding Provisions of the 1942
Revenue Act’). In enacting $1626 in 1943, Congress
intended what were to become the W-3 forms to be
covered by the section's “‘in lieu of” prohibition against
other penalties.

Because Congress has provided for a penalty
different than that provided in $7206 for the filing of
false or fraudulent W-3 forms, and because Congress
intended §7204 to replace any penalty otherwise
provided by $7206, defendant's conviction of violating
$7206 by assisting the CWA to file a false W-3 cannot
stand. However, the jury clearly found that Hughes did
assist the CWA in filing a false W-3. The Court finds
that the violation of §7204 is a lesser included violation
of $7206, and so, consonant with defendant

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1553%3A1. Public record. Not legal advice.