United States v. Sun Myung Moon

Citations: 532 F. Supp. 1360; 1982 U.S. Dist. LEXIS 10975Docket: S 81 Cr. 705 (GLG)

Court: District Court, S.D. New York; March 1, 1982; Federal District Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Reverend Sun Myung Moon, founder of the Unification Church, and Takeru Kamiyama, an advisor to Moon, are defendants in a federal case regarding alleged tax violations. The Holy Spirit Association for the Unification of World Christianity (HSA-UWC), the church's corporate entity in the U.S., was established in 1961 and obtained tax-exempt status in 1963. The Unification Church of New York (UCNY), initially an unincorporated association, became a New York not-for-profit corporation and was later absorbed by HSA-UWC in 1976. 

On October 15, 1981, a federal grand jury indicted Moon for making false federal income tax returns for the years 1973-1975, conspiracy to file false returns, and obstructing investigations related to these tax returns. The indictment highlights that Moon allegedly deposited $1.6 million from March 1973 to December 1975 in accounts at Chase Manhattan Bank, and failed to report income from these accounts and $50,000 in stock from Tong Il Enterprises, a ginseng tea importer. Kamiyama is implicated in the conspiracy and charged with aiding in the preparation of false tax returns, obstructing justice, and perjury.

A superseding indictment on December 15, 1981, added perjury charges against Kamiyama and altered some language in other counts. The defendants have filed various motions, with Moon seeking to dismiss the tax counts as legally insufficient and alleging prosecutorial misconduct. Kamiyama supports Moon's motions and additionally challenges the perjury charges, arguing that his grand jury testimony was not material, was unfairly questioned, and was improperly translated. The primary dispute centers on the tax counts against Moon, specifically regarding his failure to report interest income from the bank accounts.

Count two of the indictment alleges that Moon failed to report income from stock received from Tong I1 Enterprises and provided a false source for income on his 1973 tax return. Moon seeks dismissal on two grounds: the legal insufficiency of the taxability theory in the indictment and improper grand jury instructions. His argument regarding the tax counts' legal sufficiency is rendered moot by the superseding indictment, which clarifies that Moon "owned" the accounts and stock, thus validating counts one through four. Despite this, Moon questions if the grand jury was informed of the reasons for the language change and whether ownership was defined adequately. The court reviewed the grand jury instructions but found no evidence of misleading information, denying Moon's motion to dismiss.

Regarding the false source allegation, Moon contends that his explanation for not providing W-2 forms on the tax return merely addressed their absence and did not assert that the Unification Church was the source of income. The court finds this argument unconvincing, noting that a W-2 form indicates income from a specific source and that the implication of his explanation reasonably suggests the Unification Church was indeed the income source.

Moon argues he cannot be prosecuted for misrepresenting the source of his income because the Internal Revenue Code and Regulations do not explicitly require taxpayers to identify income sources not reflected on a W-2 form. He cites United States v. Levy to support his claim, but this reliance is deemed misplaced. Levy does not assert that prosecution under section 7206(1) requires false statements to be made in response to questions authorized by the Code. Instead, United States v. Taylor clarifies that section 7206(1) applies to any willfully false subscription to a "return, statement, or other document" under penalty of perjury, regardless of explicit regulatory requirements for specific forms. 

The court distinguishes the current case from Levy, emphasizing that Moon's tax returns, including Form 1040, inherently require the inclusion of related schedules, such as Schedules E and F, even if not explicitly mandated. Thus, false statements or explanations related to these forms can serve as grounds for prosecution under section 7206(1).

Moon also contends that his false statement regarding income source was not material, arguing that the IRS could have verified the true source through existing information from the Unification Church or Form 1099s sent by Chase. The court disagrees, noting that materiality in the context of section 7206(1) is defined as a false statement that could hinder the IRS in verifying tax return accuracy. Therefore, the potential to affect IRS functions renders Moon's false statement material, regardless of his claims to the contrary.

Only one case, United States v. DiVarco, specifically addresses the issue relevant to the current motion, and its findings oppose Moon's position. In DiVarco, defendants accurately reported their commissions but misrepresented their source, leading the district court to conclude that the statute aims to prosecute intentional tax return falsifications, irrespective of the falsification's actual effect. The court emphasized that misstating the source of income is material for prosecution under section 7206(1), a view affirmed by the Seventh Circuit.

In this context, the court is not ready to dismiss Moon's case based on the materiality of his potential false representations regarding the Unification Church as an income source. Such a misstatement could negatively affect the IRS's operations by obscuring the existence of other accounts and their interest, assuming the representation was indeed false. Moon's argument, which suggests that materiality depends solely on whether the IRS was misled, is flawed. Materiality should be assessed based on potential effects rather than actual consequences, as illustrated by precedent cases.

Additionally, the defendants have raised multiple allegations of prosecutorial misconduct. Moon contends that the government wrongfully withheld exculpatory evidence from the grand jury and misused the grand jury process by employing separate panels. Kamiyama similarly argues against the use of separate grand juries, particularly concerning perjury charges. He also claims that the government set a "perjury trap" by failing to help refresh his recollection of events. These motions have been denied.

Regarding exculpatory evidence, Moon criticizes the government's choice not to call certain Church leaders who provided affidavits about the funds' purposes in the Chase accounts. Although a binder of nineteen affidavits was submitted, only seven individuals were subpoenaed to testify, and Moon believes nine others should have been called. Despite this, the court disagrees with his argument for dismissal of the indictment based on this issue.

The Second Circuit, in United States v. Ciambrone, established that a prosecutor is not required to seek out or present exculpatory evidence to a grand jury unless specifically requested by the grand jury. While recent calls for reform exist, the current obligation is limited to making any substantial evidence negating guilt known to the grand jury, particularly if it could reasonably lead to a decision against indictment. Evidence that merely addresses credibility issues does not necessitate disclosure. Furthermore, the indictment is not invalidated if the defendant was not allowed to present their version of events before the grand jury.

In this case, the defendant, Moon, did not demonstrate that the government failed to disclose significant information to the grand jury or that the testimonies of certain witnesses were likely to prevent an indictment. The individuals in question had provided affidavits summarizing their expected testimonies related to meetings suggesting fundraising strategies and financial transactions linked to the Unification Church. The government confirmed that the substance of these testimonies was indeed presented to the grand jury, supported by witness testimonies on the same matters. Multiple witnesses had testified about the meetings in question, and the funds involved were also covered by the testimonies of several other witnesses, indicating that the grand jury had sufficient information to make its decision.

Moon's argument that witness testimony could have influenced the grand jury's decision not to indict is rejected. The primary issue was whether Moon treated funds in the Chase Manhattan Bank and Tong I1 stock as his own, which could be established regardless of the funds' original intent for the Church. Moon's refusal to testify before the grand jury is noted as significant. His references to cases dismissing indictments for lack of exculpatory evidence are deemed irrelevant, as those involved prosecutor misconduct, while Moon's claim focuses on witness credibility, which does not constitute a valid reason to challenge an indictment from a properly convened grand jury. 

Regarding the use of multiple grand juries, Moon contends that there is no guarantee that the grand jury which indicted him reviewed sufficient evidence. This claim is dismissed, asserting that a valid indictment from an unbiased grand jury suffices to proceed to trial without examining the underlying evidence. Dismissal of an indictment is reserved for extraordinary circumstances, such as misleading the grand jury or reliance on insufficient evidence, but there is no indication that hearsay was primarily used in Moon's case. Thus, the indictment stands.

The investigation's extensive duration and the high number of witnesses led to the expectation of multiple grand juries. However, the Government asserts that about ninety-five percent of the witnesses testified before the indicting grand jury, and testimonies from separate grand juries were fully presented to the indicting grand jury. Moon has not provided sufficient grounds to dismiss or disclose grand jury minutes. Kamiyama's claims regarding the use of separate grand juries are based on different arguments and are also denied. He initially invoked his Fifth Amendment right in March 1981 before the Additional Grand Jury, which returned the indictment. Kamiyama later testified before both the indicting grand jury and a substituting grand jury in July 1981. His testimony to the substituting grand jury was read to the indicting grand jury before the indictment was issued. 

Kamiyama contends that his due process rights were violated because the indicting grand jury could not assess his demeanor, and he argues that counts based on his testimony before the substituting grand jury should be dismissed due to lack of materiality. These arguments are dismissed as unfounded. Perjury can be indicted regardless of whether it occurred before the grand jury issuing the indictment, as per 18 U.S.C.A. § 1623(a). False declarations can lead to indictment even if the grand jury did not observe the witness's demeanor. Kamiyama's false statements to the substituting grand jury are still prosecutable as they fall under the scope of § 1623(a), acknowledging that this grand jury was acting in an ancillary role.

Kamiyama contends that the Government had a duty to refresh his recollection regarding his allegedly perjurious testimony, claiming that the Government set an improper "perjury trap." The Court, after reviewing various affidavits and exhibits, finds no merit in Kamiyama's assertion. Legal precedent establishes that the Government is not required to inform a witness of their perjury or their right to recant testimony. Kamiyama argues that before pursuing a perjury indictment, the Government should verify that any incorrect testimony was intentional rather than a mistake. However, his sole legal support for this claim, People v. Tyler, is distinguishable as it pertains to state law and involved questioning designed to entrap the witness, unlike Kamiyama's situation where he was appropriately called as a grand jury witness. Kamiyama also attempts to assert that the Government should have refreshed his recollection due to the eight-year gap since the events; however, the Court notes that Kamiyama was informed he was a target of the investigation well in advance and had submitted an affidavit shortly before his testimony. Thus, the context does not support his claim of being misled by the Government.

Kamiyama's motion to dismiss counts nine, ten, twelve, and thirteen is based on the assertion that the allegedly false statements made were not material to the grand jury's inquiry, which is essential for a perjury charge. The materiality standard in grand jury investigations is broad and liberally interpreted. For materiality to be established, a truthful response must have the potential to aid the inquiry, while a false answer must hinder it, focusing on the question's significance at the time it was asked. The court's role at this stage is to determine if the indictment's allegations are sufficient to charge a crime, not to assess the materiality of the testimony until after the government's case concludes.

Specifically, counts nine and ten involve false declarations by Kamiyama regarding Reverend Moon's ownership of Tong I1 stock and the management of bank accounts in Moon's name. Count nine includes questions about Moon's knowledge of stock ownership, with Kamiyama denying any discussions about it. Count ten addresses the management of bank accounts, where Kamiyama states he controlled the checkbook and that Reverend Moon signed all checks, contradicting any implication that Kamiyama signed them.

Reverend Moon did not write any part of the checks from his Chase Manhattan account other than his signature, as confirmed by the testimony of Kamiyama, who prepared the checks. Kamiyama argues that his testimony regarding Moon's limited involvement with the checks was immaterial to the grand jury's inquiry, claiming that the grand jury had already obtained relevant documents and expert handwriting analysis. However, the government contends that the grand jury's broad mandate included investigating the defendants' roles in the Chase accounts and related entities, making Kamiyama's testimony pertinent. The grand jury was entitled to rely on Kamiyama's statements; if false, they could impede the investigation. Furthermore, the existence of contradictory evidence does not render testimony immaterial, as established in case law. Thus, Kamiyama's arguments do not warrant dismissal of the indictment counts.

Kamiyama's challenge to the perjury counts in the indictment involves counts twelve and thirteen. Count twelve accuses Kamiyama of making false declarations regarding his $100,000 stock purchase in Tong II in January 1974. Key inquiries include whether Kamiyama informed Reverend Moon about buying additional stock, discussed the purchase's rationale, or considered the propriety of owning more shares than Moon. Kamiyama maintained that the investment was solely for Tong II's expansion and denied any immigration-related motives. Count thirteen involves allegations that Kamiyama instructed Michael Warder to mislead investigators about the source of Warder's funds for purchasing Tong II stock. Kamiyama contends that these questions were irrelevant to the grand jury's investigation; however, the court disagrees, stating that the inquiries pertain to critical matters related to the defendants' involvement in financial dealings, including the Chase accounts and tax return preparations. The court finds the government's arguments for the relevance of these questions compelling, indicating potential violations of federal law and the nature of the defendants' intent and actions.

The question of whether Kamiyama attempted to obstruct the investigation is deemed significant. Kamiyama challenges a specific instance of alleged perjury related to his response about conversations concerning stock ownership in Tong II. He claimed, "I didn't even think about it a bit," and argues this should be dismissed on the grounds that his answer was unresponsive, citing Bronston v. United States, which holds that a literal but unresponsive answer cannot constitute perjury. However, the court notes that it cannot definitively conclude that Kamiyama's answer was literally true based on current information. 

Kamiyama also contends that his subsequent testimonies, which are not included in the indictment, clarify that he did not intend to mislead the grand jury. He maintains that his memory of past conversations may have faded over time. While the court finds his later testimony somewhat evasive, it concludes that the materiality of his original answer is not sufficiently raised at this stage. The determination of Kamiyama's intent and the truthfulness of his statement are issues reserved for trial. 

The court denies the defendants' motions, except for Kamiyama's motion regarding translation accuracy during the grand jury proceedings, and sets the trial to commence on March 22, 1982. Additional notes clarify discrepancies regarding the year of UCNY's incorporation and outline the court's rulings on other motions made by co-defendant Moon, including denials related to claims of selective prosecution and the suppression of evidence.

The court denied a request for the government to produce all evidence considered "favorable" to the defendant, clarifying that the Brady standard pertains specifically to exculpatory evidence, which must be disclosed without a formal order. Regarding Kamiyama, the court partially granted motions for an independent interpreter to assess the accuracy of grand jury testimony cited as perjurious, and for other procedural matters, but denied a motion to dismiss based on claims of selective prosecution. The defendants withdrew motions to dismiss based on conspiracy charges and prosecutorial misconduct related to alleged misrepresentations about tax law. An allegation of witness intimidation by the prosecutor was also deemed withdrawn due to lack of discussion in the filings.

The court appointed a Japanese translator to review disputed translations, which remains ongoing, and will address these issues separately without delaying other motions. Moon contends that the government's issuance of a superseding indictment implies the original was invalid, a point disputed by the government, which maintains that the original indictment was valid and that the superseding indictment served to clarify perjury counts. Moon also argues that the Church could be viewed as the true source of reported income, but the court refrains from determining beneficial ownership at this stage, deeming it a factual matter for trial. The court notes that materiality in tax matters is context-dependent and does not adhere to a strict standard.

Both tests for determining the applicability of legal standards have been utilized within the same circuit, as seen in cases like United States v. Warden and United States v. DiVarco, with one circuit suggesting that either test may be permissible depending on the factual context. The misstatement in DiVarco, which did not pertain to the "Wages, salaries, tips, and other employee compensation" line on income tax returns, is deemed irrelevant. Some misconduct allegations have been retracted. The Government indicated that witness Kamiyama testified before a substituting grand jury on July 16, 1981, due to the indicting grand jury's scheduled vacation, and he later testified before both grand juries on July 21, 1981, at the Government's arrangement. Kamiyama raised additional materiality arguments regarding specific counts, which are addressed in a subsequent section. Furthermore, the indicting grand jury had sufficient opportunity to evaluate the defendant's demeanor during his testimony. Kamiyama contends that the indictment is deficient for charging him with perjury "before" rather than "in a proceeding ancillary to" the grand jury; however, this argument holds little merit, as both types of grand jury proceedings are still considered legitimate. The Court will determine the materiality of the alleged perjury as a legal question. Notably, none of the cases cited by Kamiyama involved grand jury proceedings.