Fraud, deceit, and tax evasion are aggravated felonies only if the “loss to the victim” or revenue loss to the government is $10,000.[623]  Money laundering is also an aggravated felony if the amount of funds laundered exceeds $10,000.[624]  See also § 7.86 (money laundering), infra.  Important questions remain unanswered regarding these categories.  What is the meaning of “loss to the victim” or government, or amount of funds?  What evidence may the immigration authorities use to establish the amount of loss?  What is the effect of repayment of the funds?  What if there was no actual loss? 

 

            The safest strategy is to avoid any reference in the record of conviction to any loss in an amount in excess of $10,000, including in any restitution order.  In some cases the defendant may be able to delay conviction and sentencing for some period while s/he pays restitution voluntarily, in order to have a lower sum reflected on the record.

[623] INA § 101(a)(43)(M), 8 U.S.C. § 1101(a)(43)(M).

[624] INA § 101(a)(43)(D), 8 U.S.C. § 1101(a)(43)(D).

CRIMES OF MORAL TURPITUDE " FRAUD OFFENSES " DEFINITION AGGRAVATED FELONIES " FRAUD OFFENSES " DEFINITION
The Supreme Court has held that "[T]he well-settled meaning of 'fraud' require[s] a misrepresentation or concealment of material fact" and "materiality of falsehood is an element of the federal mail fraud, wire fraud, and bank fraud statutes." Neder v. United States, 527 U.S. 1, 23, 25 (1999). Since Neder, the federal circuits have uniformly ruled that schemes criminalized by the mail or wire fraud statutes must involve material false representations, material omissions of fact, or both. Federal prosecutors in the Ninth Circuit recently have advanced the proposition that the federal wire and mail fraud statutes criminalize two different types of schemes: (1) those involving the common law element of material false statements and omissions; and (2) those covered by the term "scheme to defraud," as used in those fraud statutes, which omits this common law requirement and requires only an intent to deceive; nothing deceptive need actually ever be said or done. In a recent case in the Central District of California, the defendant was charged with obtaining funds by means of fraudulent representations and omissions, an allegation necessary to adequately state a fraud offense under Neder. But at trial the government argued that the wire fraud statute reaches "schemes" involving an intent to deceive or cheat, even absent the making of a material falsehood or omission. Over Namvar's objection, the district court took the unprecedented step of redacting from the Circuit's model instruction the element of a material misrepresentation and/or omission of fact, and Namvar was convicted. In an unpublished opinion, a three judge panel affirmed. In fact, the term "scheme to defraud," has always been interpreted to incorporate the core element of fraud at common law: "everything designed to defraud by representations as to the past or present, or suggestion, or promises as to the future." McNally v. United States, Id. 483 U.S. 350, 358 (1987) (quoting Durland v. United States, 161 U.S. 306, 313 (1896)) (emphasis added). Neder rejected the argument that the federal fraud statutes can be read to require no more than an intent to deceive. 527 U.S. at 23-24 (emphasis in original) That a panel decision could approve a sea change in the law of fraud in an unpublished opinion is deeply disturbing, not least of all because unpublished opinions rarely are reviewed by the Circuit sitting en banc. A group of ex-federal prosecutors, however, has taken the highly unusual step of filing an amicus in support of Namvar's petition for rehearing en banc. The amicus support provides hope that the Namvar opinion will receive reconsideration. If it does not, more fraud-less fraud prosecutions can be expected in the Ninth Circuit, and defense counsel will need to be prepared to counter them on the basis of Neder and McNally. Thanks to Dennis Riordan.

AGGRAVATED FELONY"TAX EVASION"FRAUD OFFENSE
Kawashima v. Holder, 132 S.Ct. 1166 (Feb. 21, 2012) (federal conviction of willfully making a false tax return, in violation of 26 U.S.C. 7206(a), and aiding and assisting in the preparation of a false tax return, under 26 U.S.C. 7206(2), constituted fraud offense aggravated felonies, under INA 101(a)(43)(M)(i), 8 U.S.C. 1101(a)(43)(M)(i), because they are crimes involv[ing] fraud or deceit in which the loss to the victim(s) exceeds $10,000, even though they are not listed as aggravated felonies under INA 101(a)(43)(M)(ii), 8 U.S.C. 1101(a)(43)(M)(ii), which lists certain tax evasion aggravated felonies).

AGGRAVATED FELONY"FRAUD OFFENSE"AIDING PREPARATION OF A FALSE TAX RETURN
Kawashima v. Holder, 132 S.Ct. 1166 (Feb. 21, 2012) (federal conviction of aiding and assisting in the preparation of a false tax return, under 26 U.S.C. 7206(2), constituted a fraud offense aggravated felony, under INA 101(a)(43)(M)(i), 8 U.S.C. 1101(a)(43)(M)(i): We conclude that Mrs. Kawashima's conviction establishes that, by knowingly and willfully assisting her husband's filing of a materially false tax return, Mrs. Kawashima also committed a felony that involved deceit.).

AGGRAVATED FELONY"FRAUD OFFENSE"AIDING PREPARATION OF A FALSE TAX RETURN
In Kawashima v. Holder, 132 S.Ct. 1166 (Feb. 21, 2012), the Supreme Court held that federal convictions of willfully making a false tax return, in violation of 26 U.S.C. 7206(a), and aiding and assisting in the preparation of a false tax return, under 26 U.S.C. 7206(2), constituted fraud offense aggravated felonies, under INA 101(a)(43)(M)(i), 8 U.S.C. 1101(a)(43)(M)(i). Justice Thomas, writing for a six-member majority, held that those two offenses did involv[e] fraud or deceit, as required by (M)(i), and also rejected the argument that Congress action in specifically listing other tax evasion offenses, under 26 U.S.C. 7201, as aggravated felonies under INA 101(a)(43)(M)(ii), 8 U.S.C. 1101(a)(43)(M)(ii), meant that Congress did not mean for tax offenses that were not listed in (M)(ii) to be considered as aggravated felonies. Justice Ginsburg filed a dissenting opinion, in which Justices Breyer and Kagan joined. In doing so, the court specifically reaffirmed the categorical analysis that looks to the elements of the offense, rather than to the underlying facts of the offense, to determine whether the offense of conviction falls within the boundaries of the fraud or deceit offense portion of the conviction-based ground of removal. To determine whether the Kawashimas' offenses involv[e] fraud or deceit within the meaning of Clause (i), we employ a categorical approach by looking to the statute defining the crime of conviction, rather than to the specific facts underlying the crime. See Gonzales v. Duenas"Alvarez, 549 U.S. 183, 186, 127 S.Ct. 815, 166 L.Ed.2d 683 (2007) (applying the approach set forth in Taylor v. United States, 495 U.S. 575, 599"600, 110 S.Ct. 2143, 109 L.Ed.2d 607 (1990)). If the elements of the offenses establish that the Kawashimas committed crimes involving fraud or deceit, then the first requirement of Clause (i) is satisfied. (Id. at 1172 [footnote omitted].) The court made it clear that it was here considering only the fraud or deceit offense portion of this aggravated felony, rather than the loss requirement. (Id. at n.3.) The court reasoned that an offense could fall within the fraud or deceit aggravated felony definition, even though fraud or deceit themselves were not formal elements of the offense: Although the words fraud and deceit are absent from the text of 7206(1) and are not themselves formal elements of the crime, it does not follow that his offense falls outside of Clause (i). The scope of that clause is not limited to offenses that include fraud or deceit as formal elements. Rather, Clause (i) refers more broadly to offenses that involv[e] fraud or deceit"meaning offenses with elements that necessarily entail fraudulent or deceitful conduct. (Id. at 1172.) The courts general test for whether the conviction was for an offense involving fraud or deceit was whether it was an offense with elements that necessarily entail fraudulent or deceitful conduct. (Id. [emphasis supplied].) In this context, therefore, the court interpreted the word involve to mean possess formal elements that necessarily entail fraudulent or deceitful conduct. Addressing Mr. Kawashimas conviction of willfully making a false tax return, in violation of 26 U.S.C. 7206(a), the court stated: When subparagraph (M) was enacted, the term deceit meant a the act or process of deceiving (as by falsification, concealment, or cheating). Webster's Third New International Dictionary 584 (1993). Mr. Kawashima's conviction under 7206(1) establishes that he knowingly and willfully submitted a tax return that was false as to a material matter. He therefore committed a felony that involved deceit. (Id. at 1172.) The same analysis leads to the same conclusion with respect to the similar offense committed by Mrs. Kawashima: aiding and assisting in the preparation of a false tax return, under 26 U.S.C. 7206(2): We conclude that Mrs. Kawashima's conviction establishes that, by knowingly and willfully assisting her husband's filing of a materially false tax return, Mrs. Kawashima also committed a felony that involved deceit. (Id. at 1173.) The court also rejected the argument that the specific listing of one tax evation offense in (M)(ii) indicated a congressional intent to exclude other tax evastion offenses from (M)(i), because otherwise (M)(ii) would be add nothing to the law. In doing so, the court reasoned: Moreover, 7201 includes two offenses: the offense of willfully attempting to evade or defeat the assessment of a tax as well as the offense of willfully attempting to evade or defeat the payment of a tax. Sansone v. United States, 380 U.S. 343, 354, 85 S.Ct. 1004, 13 L.Ed.2d 882 (1965) (emphasis in original). As the Government notes, it is possible to willfully evade or defeat payment of a tax under 7201 without making any misrepresentation. For example, 7201 can be violated by a taxpayer who files a truthful tax return, but who also takes affirmative steps to evade payment by moving his assets beyond the reach of the Internal Revenue Service. Although the Government concedes that evasion-of-payment cases will almost invariably involve some affirmative acts of fraud or deceit, it is still true that the elements of tax evasion pursuant to 7201 do not necessarily involve fraud or deceit. (Id. at 1175.) The court thus provides an excellent example of an argument that a given offense does not necessarily involve fraud or deceit, because it can be committed by other means: it is possible to willfully evade or defeat payment of a tax without making any misrepresentation. (Ibid.) Justice Ginsburg, joined by Justices Breyer and Kagan, dissented. She summarized her reasoning as follows: The Court's construction of the statute is dubious, as I see it. For one thing, it effectively renders Clause (ii) superfluous. Further, the Court's reading sweeps a wide variety of federal, state, and local tax offenses"including misdemeanors"into the aggravated felony category. In addition, today's decision may discourage aliens from pleading guilty to tax offenses less grave than tax evasion, thereby complicating and delaying enforcement of the internal revenue laws. I conclude that Clause (i) does not address tax offenses, and would therefore hold that making a false statement on a tax return in violation of 7206 is not an aggravated felony. (Id. at 1176.)

BIA

AGGRAVATED FELONY - FRAUD - WELFARE FRAUD
Matter of Garcia-Madruga, 24 I&N Dec. 436 (BIA Jan. 17, 2008) (Rhode Island conviction of welfare fraud, in violation of R.I. 40-6-15, is not an aggravated felony theft offense, because a "theft" offense, for aggravated felony purposes, requires "the taking of, or exercise of control over, property without consent, and with the criminal intent to deprive the ownership of the rights and benefits of ownership, even if such deprivation is less than total or permanent" (emphasis added); welfare fraud is a fraud offense, in that it requires a taking with consent, obtained by fraud).

NOTE: When faced with a plea to a fraud offense involving a loss of over $10,000, counsel may wish instead to plea to a "theft" offense with a sentence imposed of 364 days or less. This may avoid issues regarding a finding of loss and "extra element" analysis under Matter of Babiaskov.

Second Circuit

AGGRAVATED FELONY " FRAUD OFFENSE " PLEA DID NOT ESTABLISH OFFENSE WAS COMMITTED WITH SPECIFIC INTENT TO DEFRAUD
Akinsade v. Holder, 678 F.3d 138 (2d Cir. May 1, 2012) (federal conviction for embezzlement by a bank employee under 18 U.S.C. 656, did not categorically constitute a fraud aggravated felony, for purposes of deportation, where none of the facts to which the petitioner actually and necessarily pleaded to establish whether that offense was committed with a specific intent to defraud).

Fourth Circuit

AGGRAVATED FELONY " THEFT OFFENSE " FRAUD LACKS THE WITHOUT CONSENT ELEMENT OF THEFT OFFENSE
Salem v. Holder, ___ F.3d ___, 2011 WL 1998330 (4th Cir. May 24, 2011) (Virginia conviction for petit larceny under Va.Code Ann. 18.2"96, did not categorically qualify as a an aggravated felony theft offense, because the statute might encompass either fraud or theft, and fraud did not constitute a theft offense); Soliman v. Gonzales, 419 F.3d 276, 282-83 (4th Cir.2005) (theft for purposes of the INA does not include fraud, because fraud lacks the without consent element of the taking that is essential to a finding of theft).

Fifth Circuit

AGGRAVATED FELONY - FRAUD OFFENSES - DEFINITION OF "INVOLVES"
James v. Gonzales, ___ F.3d ___, 2006 WL 2536614 (5th Cir. Sept. 5, 2006) (concerning definition of aggravated felony offenses involving fraud or deceit, court stated: 'Involves' requires that the offense 'necessarily entails the "involved" behavior.' We recognize that '[w]hether an offense "involves" fraud is a broader question than whether it constitutes fraud.'").

Ninth Circuit

AGGRAVATED FELONY - FRAUD - WHERE FRAUD NOT AN EXPLICIT ELEMENT, BUT IMPLICIT IN NATURE OF OFFENSE
Blanco v. Mukasey, 518 F.3d 714 (9th Cir. Mar. 3, 2008) ("Our cases hold that intent to defraud is implicit in the nature of the crime when the individual makes false statements in order to procure something of value, either monetary or non-monetary. See id. (holding that fraud is not inherent where crime "does not involve the use of false statements ... nor does the defendant obtain anything" of value); see also Navarro-Lopez, 503 F.3d at 1076 (Reinhardt, J., concurring); cf. Notash v. Gonzales, 427 F.3d 693, 698 (9th Cir.2005) (holding fraud not inherent where statute "did not require an intent to deprive the United States of revenue"). Fraud therefore does not equate with mere dishonesty, because fraud requires an attempt to induce another to act to his or her detriment. See Black's Law Dictionary 685 (8th ed.2004). One can act dishonestly without seeking to induce reliance. . . .").

Other

SAFE HAVEN - AGGRAVATED FELONY FRAUD - TAX FRAUD
A plea to a violation of 26 U.S.C. 7206(2) does not constitute an aggravated felony. INA 101(a)(43)(M)(ii), 8 U.S.C. 1101(a)(43)(M)(ii) ["is described in section 7201 of the Internal Revenue Code of 1986 (relating to tax evasion) in which the revenue loss to the Government exceeds $10,000"]). See Evangelista v. Ashcroft, 359 F.3d 145, 149-53 (2004); Lee v. Ashcroft, 368 F.3d 218 (2004) (federal conviction of violating 7206(a) is not an aggravated felony, since Congress specified only one tax crime (Section 7201) as an aggravated felony). It may be a crime involving moral turpitude.

Possible alternative dispositions include a plea to a violation of 26 U.S.C. 7203 (willful failure to file return supply information, or pay tax), a misdemeanor, and 26 U.S.C. 7202 (willful failure to collect or pay over tax), a felony.

A plea to multiple violations of INA 274A(a)(1)(A), would constitute a "pattern or practice" violation of INA 274A(f), 8 U.S.C. 1324a (f), a misdemeanor punishable by a fine of not more than $3,000 for each alien with respect to whom such a violation occurs, imprisonment for not more than six months for the entire pattern or practice, or both.