Kawashima v. Holder (10-577)

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Oral argument: 
November 7, 2011

Oral argument: November 7, 2011

Appealed from: United States Court of Appeals for the Ninth Circuit (Aug. 4, 2010)

AGGRAVATED FELONY, DEPORTATION, FRAUD, DECEIT, LAWFUL PERMANENT RESIDENT

The Immigration and Naturalization Service determined that the Petitioners, Akio and Fusako Kawashima, are subject to deportation because they have been convicted of aggravated felonies under 8 U.S.C. § 1101(a)(43)(M)(i). The Kawashimas had previously pled guilty to crimes related to the filing of a false tax statement. The United States Court of Appeals for the Ninth Circuit upheld the Board of Immigration Appeals’ determination that the Kawashimas are deportable. The Kawashimas argue that their crimes are not aggravated felonies because they do not require fraud or deceit as an element, and that deportable tax crimes only include tax evasion. The Respondent, Attorney General Eric Holder, argues that the Kawashimas’ guilty pleas included fraud by implication. This case will impact the methods the Internal Revenue Service uses to enforce the tax code, and may have a profound impact on immigrants who plead guilty to tax crimes.

  • [Question presented]

  • [Issue]

  • [Facts]

  • [Discussion]

  • [Analysis]

Question presented

Whether, in direct conflict with the Third Circuit, the Ninth Circuit erred in holding that Petitioners' convictions of filing, and aiding and abetting in filing, a false statement on a corporate tax return in violation of 26 U.S.C. §§ 7206(1) and (2) were aggravated felonies involving fraud and deceit under 8 U.S.C. § 1101(a)(43)(M)(i), and Petitioners were therefore removable.

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Issue

Do convictions of filing, and aiding and abetting in filing, an inaccurate corporate tax return constitute aggravated felonies warranting the deportation of non-citizen offenders?

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Facts

Petitioners Akio and Fusako Kawashima (“the Kawashimas”) are Japanese natives and citizens, but have been lawful permanent residents of the United States since 1984. The Kawashimas established a successful restaurant in California, owned by Nihon Seibutsu Kagaku Center, Inc., a corporation in which Mr. Akio Kawashima owns shares. In 1992, Mr. Kawashima signed the 1991 corporate tax return for Nihon Seibutsu Kagaku Center, Inc. In 1997, because of that signature, Mr. Kawashima pled guilty to “subscribing to a false statement on a tax return,” a violation of 26 U.S.C. § 7206(1), and stipulated that the total actual tax loss was $245,126. At the same time, Mrs. Fusako Kawashima pled guilty to “aiding and assisting in the preparation of a false tax return,” a violation of 26 U.S.C. § 7206(2).

Four years later, the Immigration and Naturalization Service (“INS”, later the Bureau of Immigration and Customs Enforcement in the Department of Homeland Security) informed the Kawashimas that their convictions constituted aggravated felonies under 8 U.S.C. § 1101(a)(43)(M)(i) (hereinafter the “broader definition of aggravated felony”). Pursuant to this determination, the couple could be subject to deportation. 8 U.S.C. § 1101(a)(43) describes crimes that are considered aggravated felonies. Subsection (M)(i) of this statutory definition of aggravated felony does not list specific crimes, but rather encompasses any crime involving fraud or deceit where the victim’s loss is greater than $10,000. Subsection (M)(ii), however, specifies that tax evasion (26 U.S.C. § 7201) is an aggravated felony. .

An Immigration Judge agreed with the INS and ordered that the couple be removed to Japan. The Kawashimas appealed to the Board of Immigration Appeals, which, after initially remanding to fix defects in the trial record, affirmed the decision. The Kawashimas appealed to the United States Court of Appeals for the Ninth Circuit.

The Ninth Circuit considered the case several times, eventually issuing four opinions over two years as the Ninth Circuit and Supreme Court decided new cases dealing with similar issues. At issue in the revised opinions was whether Mrs. Kawashima had met the amount required under the terms of the statute. In each opinion, though, the court maintained that violations of 26 U.S.C. §§ 7206(1) and (2) constitute aggravated felonies under the broader definition (8 U.S.C. § 1101(a)(43)(M)(i)), so long as the loss to the government exceeds $10,000. The Supreme Court granted certiorari to determine whether the Kawashima’s crimes were aggravated felonies warranting deportation.

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Discussion

The Supreme Court will determine whether violations of 26 U.S.C. §§ 7206(1) and (2) are aggravated felonies under the broader definition of aggravated felony (8 U.S.C. § (a)(43)(M)(i)), which includes in the aggravated felony category all crimes involving fraud or deceit where the victim’s loss is greater than $10,000. The Kawashimas argue that §§ 7206 (1) and (2) do not qualify as aggravated felonies because the crimes do not require fraud or deceit as an element, and that deportable tax crimes include only tax evasion. Respondent Holder argues that §§ 7206(1) and (2) are aggravated felonies because they require that the offenders willfully make false statements, and that such statements implicate fraud and deceit.

Former Commissioner for the Internal Revenue Service (“IRS”) Johnnie Walters contends that Holder’s argument would massively expand the definition of aggravated felonies, and have a detrimental effect on the government’s ability to enforce criminal tax laws. Walters explains that many tax crimes are “willful” and “false.” Therefore, under Holder’s interpretation, almost any tax crime (federal, state, or local) could become a deportable offense, even a misdemeanor. Such a result, Walters believes, would make it very difficult to enforce the tax code. He explains that the IRS frequently charges offenders under § 7206 because a charge for tax evasion under § 7201 is generally more difficult to prove. Because § 7206 imposes lesser penalties than tax evasion, the IRS can more easily obtain guilty pleas from offenders. However, if a guilty plea under § 7206 could result in deportation for the offender, a permanent resident will almost certainly choose to go to trial, slowing down the administration of tax laws.

Respondent Holder points out that the Kawashimas’ argument - that the only tax crime that can be classified as an aggravated felony is tax evasion - would result in difficulties in categorizing crimes that clearly involve both fraud and taxes. . As an example, Holder cites 18 U.S.C. § 371 (conspiracy to defraud the United States), which can, but does not always, involve tax income. Holder asserts that the Kawashima’s reading of the broader definition of aggravated felony wouldn’t consistently include violations of the conspiracy statute, and that this conflicts with the Supreme Court’s explicit statements that § 371 should not be excluded. Holder points out that it would be odd if some conspiracies to defraud the United States were aggravated felonies “involving ‘fraud or deceit,’” thus warranting deportation under the broader definition of aggravated felony, while some that involved taxes were not.

The Asian-American Justice Center and other immigrant aid groups (“AAJC”) note that aggravated felonies, as the most serious offenses, have severe consequences for permanent residents and their families. For example, AAJC points out that conviction of an aggravated felony can lead to permanent removal (which can divide citizen children from their parents), or to denial of asylum eligibility or temporary protected status, which forces people to remain in (or return to) dangerous countries. AAJC also notes that such a conviction can remove the opportunity for immigrant women to seek help under the Violence Against Women Act. In light of these consequences, the AAJC argues that courts should read the aggravated felony statute as narrowly as possible.

However, Holder argues that the principles of lenity—which provide that an ambiguous statute should be decided in favor of a defendant—do not apply. Holder points out that these principles do not apply where a statute is only ambiguous because of conflicting judicial authority. Moreover, Holder asserts that the mere possibility of removal based on a particular construal of a statute is not sufficient to create ambiguity where the plain meaning of a statute is clear. Based on the jurisprudential values of predictability and following Congressional intent, the Ninth Circuit noted in an earlier Kawashima opinion that it is important not to extend the scope of lenity where statutes have a clear plain meaning.

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Analysis

This case presents the question whether convictions related to the filing of an inaccurate corporate tax return in violation of 26 U.S.C. §§ 7206(1) and (2) constitute aggravated felonies within the meaning of the broader definition of aggravated felony (8 U.S.C. § 1101(a)(43)(M)(i)), thus warranting deportation.

Did Petitioners’ crimes of conviction contain the requisite elements of “Fraud or Deceit” to qualify as aggravated felonies under (M)(i)?

The Petitioners argue that the crimes they were convicted of—filing, and aiding and abetting in filing a false corporate tax return—do not have the elements of fraud or deceit required to qualify as aggravated felonies under the broader definition of aggravated felony in 8 U.S.C. 1101(a)(43)(M)(i) (hereinafter “(M)(i)”). The Kawashimas’ argue that the consideration of deportability rests on the elements of the crime that an individual was ultimately convicted of, regardless of what crime was actually committed. Thus, the Kawashimas allege that, although Mr. Kawashima pled guilty to acting willfully with specific intent, his conviction did not involve fraud or deceit. The Kawashimas argue that acting willfully is an element in every tax crime, and therefore that such a finding does not alone establish fraud or deceit. In support of their argument, the Kawashimas point to the Commissioner of Internal Revenue’s acquiescence in the holding that a violation of § 7206(1), without more, does not establish fraudulent intent. As a result, the Kawashimas conclude that, because acting willfully does not establish fraud or deceit, Mr. Kawashima was not convicted of a crime that falls within the category of an aggravated felony.

Respondent Holder alleges that the Kawashimas’ crimes necessarily involve fraud or deceit. Holder contends that deceit is defined for statutory purposes as attempting to induce a person to act by purposefully making a false statement or impression. Thus, Holder contends, Mr. Kawashima’s conviction for making false statements in his tax return (in violation of § 7206(1)) satisfies the definition of deceit. Additionally, Holder claims that Mrs. Kawashima’s conviction of willfully assisting Mr. Kawashima in filing the false tax return (in violation of § 7206(2)) also satisfies the required element of deceit for the same reason. As a result, Holder argues that, because the Kawashimas’ convictions under § 7206(1) and (2) both require proof that they knowingly made or assisted in the making of false statements in their tax return, their crimes necessarily satisfy the requisite fraud or deceit of (M)(i).

Have Petitioners’ committed an aggravated felony under 8 U.S.C 1101(a)(43)(M)(i)?

The Kawashimas alternatively argue that, notwithstanding a finding that their crimes satisfy the element of fraud or deceit, their crimes nevertheless do not fall within the meaning of (M)(i) aggravated felonies. The Kawashimas allege that, under the traditional canons of statutory construction, tax crimes, such as those for which they have been convicted, fall under (M)(ii) to the exclusion of (M)(i). The Kawashimas contend that, when Congress uses certain language in one section of a statute but does not use the same language in another section of the same statute, it is presumed that the omission was intentional. Therefore, the Kawashimas reason that, because (M)(i) uses the language of “loss” to a “victim” resulting from fraud or deceit, whereas (M)(ii) deals specifically with “revenue” loss to the Government, Congress intended to create two different categories of crime. As a result, the Kawashimas conclude that (M)(i) was not intended to cover crimes involving such governmental revenue loss.

Holder argues that the Kawashimas’ crimes fall within plain meaning of (M)(i). Holder contends that by including additional categories to §1101(a)(43), specifically (M)(ii), Congress was simply expanding, not constraining, the scope of the definition of “aggravated felony”Specifically, Holder alleges that (M)(ii)’s reference to “revenue loss” does not limit the meaning of (M)(i)’s reference to victim loss. Holder argues that the canon stipulating that specific language controls general terms does not apply in this situation because the statute lacks a section that deals with all classes of tax crimes. Holder explains that (M)(ii)’s provision is too narrow to establish a class of tax crimes, since it only applies to a crime of tax evasion in which the revenue loss to the government is over $10,000. Holder notes that because no other tax crimes are specifically enumerated in (M)(ii), they are not excluded from (M)(i). Thus, by referring only to the single provision of § 7201 (tax evasion), Holder asserts that Congress did not negatively imply a broader category that includes all tax crimes in (M)(ii).

The Kawashimas allege further that a reading of (M)(i) to include crimes of tax fraud or deceit would essentially render (M)(ii) unnecessary. The Kawashimas explain that a basic canon of statutory construction is that a statute should, if possible, be read as a whole and applied in a manner as to give meaning to all of its provisions so that no part is rendered unnecessary. Consequently, the Kawashimas argue that the Ninth Circuit erroneously focused exclusively on (M)(i), as if the provisions of (M)(ii) did not exist, and thus improperly interpreted the statute. Proper reading of (M)(i) and (M)(ii) together, the Kawashimas argue, leads to the conclusion that, by specifically including tax evasion as an aggravated felony in (M)(ii), Congress limited the meaning of the general terms “fraud” and “deceit” found in (M)(i). Similarly, the Kawashimas contend that the term “revenue loss” found in (M)(ii) limits the losses that are covered by (M)(i). Accordingly, the Kawashimas argue, tax crimes involving a revenue loss to the Government are exclusively covered by (M)(ii). Furthermore the Kawashimas contend that, because violations of §§ 7206(1) and (2) do not involve fraud or deceit, it defies logic to hold that such crimes fall under (M)(i) when tax evasion, which necessarily involves fraud, does not. As a result, the Kawashimas conclude that, when properly construed, M(i) does not include tax crimes, whether violations of § 7206 or tax evasion. Therefore, the Kawashimas argue, because (M)(ii) involves only tax evasion, a crime of which the Kawashimas were not convicted, they have not been convicted of aggravated felonies.

Holder contends that the canon requiring a statutory reading that avoids unnecessary provisions does not support the Kawashimas’ suggested reading. Holder argues that, because there is nothing to warrant the conclusion that (M)(ii) extends to all tax crimes generally, there simply is no ambiguity or conflict between (M)(i) and (M)(ii); therefore the canon against unnecessary provisions does not apply. Additionally, Holder notes that Congress has occasionally included deliberate redundancies in statutes where it is convenient for clarity. Thus, Holder suggests that Congress may have simply wanted to be especially clear, in (M)(ii), that tax evasion is an aggravated felony. Holder explains further that the statutory definition of an aggravated felony is already expansive and contains many redundancies, concluding that it is highly unlikely that Congress intended (M)(i) to be limited in any way by (M)(ii).

Should the Court follow the rule of lenity in its reading and application of the statutory provisions?

The Kawashimas also argue that, if the Court finds that the statute is unclear, the rule of lenity requires the Court to construe the provisions in their favor. Specifically, the Kawashimas allege that the doctrines of Due Process and Fair Notice mandate that the conduct for which an immigrant may be deported be clear and certain. Thus, because of the current conflict in the interpretation of the statutory provisions, the Kawashimas argue that the Court should interpret the statutes in their favor by finding that they have not been convicted of aggravated felonies.

Holder counters that the rule of lenity does not apply in this case.Holder alleges that lenity only applies where the ambiguity is particularly grave, forcing the Court to guess with respect to the proper application. Thus, Holder explains that, even if the Court finds the meaning of the statute to be less than concrete, the Court is not forced to merely guess at Congressional intention; therefore, the rule of lenity is not triggered.

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Conclusion

The Supreme Court will decide whether convictions related to the filing of an inaccurate corporate tax return constitute aggravated felonies within the meaning of 8 U.S.C. 1101(a)(43)(M)(i), warranting the deportation of the offenders. The Kawashimas, as Petitioners, argue that the crimes for which they were convicted fall outside of the statutory meaning of aggravated felonies, concluding that the convictions do not render them deportable. Respondent Attorney General Holder, however, argues that, under the plain language of the statutory provisions, the Kawashimas’ crimes qualify as aggravated felonies permitting deportation. The Court’s decision will affect future tax crime jurisprudence, as well as the lives of non-citizens and their families by defining the scope of the crimes for which the government may deport them.

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Authors

Prepared by: Curtis Coolidge and Jocelyn Krieger

Edited by: Eric Schulman

Additional Sources

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