United States District Court, D. Massachusetts
ORDER ON DEFENDANT'S MOTION FOR
H. HENNESSY, UNITED STATES MAGISTRATE JUDGE.
has moved to discover documents generated in connection with
an appeal to the Office of Appeals of the Internal Revenue
Service (“IRS”) by his former tax client, Brian
A. Joyce. According to the motion, Joyce appealed an IRS
assessment of taxes and penalties for a distribution of IRA
assets that the IRS determined was unlawfully reported on
Joyce's tax return as a qualified IRS rollover. For the
reasons stated below, the motion is DENIED.
indictment filed on January 18, 2018, Defendant John H.
Nardozzi was charged with Conspiracy to Defraud the United
States (Klein Conspiracy), and eight counts of
Aiding in the Filing of False Tax Returns. See Doc.
3. Nardozzi's conduct involved preparing tax returns for
former State Senator Brian A. Joyce, his wife, and business
entities associated with one or both of them.
to the original discovery request, Nardozzi's motion, and
the Government's opposition, in 2014, Joyce withdrew
$400, 000 from a Simplified Employee Pension - Individual
Retirement Account (“IRA”) and used those and
other funds to purchase $471, 250 in stock in a
privately-held insurance brokerage company. The stock was
issued in the name of Brian A. Joyce SEP-IRA and Mary Joyce
SEP-IRA. Nardozzi prepared the tax return reflecting this
event, treating the stock purchase as a rollover of IRA
assets, and filed the return in September 2015. (The
lawfulness of the tax treatment of these IRA assets is the
basis of charges in the indictment.)
the IRS issued a notice to Joyce of an assessment of tax and
penalty, finding that the transaction did not qualify as a
rollover, but rather constituted a distribution to the
taxpayer, triggering a penalty for early withdrawal of IRA
assets, and a tax on the distribution. Joyce initiated an
appeal or review of the IRS determination in the Boston IRS
Office of Appeals (“Joyce Appeal”). No. decision
was rendered. It is the records of this appeal that Nardozzi
seeks in discovery.
relevant part, Rule 16 permits a defendant to inspect or copy
documents in the Government's possession, custody, or
control that are “material to preparing the
defense.” See Fed. R. Crim. P. 16(a)(1)(E)(i).
Here, the United States concedes possession of the IRS's
file of the Joyce Appeal. See Doc. 68 n.2. The
question then is whether the documents are material to
preparing Nardozzi's defense. In addressing this showing,
Nardozzi argues that if the Joyce Appeal file reflects an
internal IRS dispute about the proper tax treatment of the
IRA assets-taxable distribution or qualified rollover-then
such information is exculpatory, and material to the
preparation of his defense. I deny the motion because there
are no responsive materials, and because Nardozzi's
argument depends on speculation and plainly distinguishable
and foremost, the Government represented at the hearing that
it had reviewed the Joyce Appeal file and that there is no
information in it responsive to Nardozzi's discovery
request. Even if I allowed the motion, on the basis of this
representation, it would call for no production.
the motion fails to suggest a reason to question the
Government's representation. Local Rule 7.1 requires that
a party filing a motion also file “a memorandum of the
reasons . . . why the motion should be granted.”
See Local Rule 7.1(b)(1). Nardozzi has failed to do
this. Nardozzi fails to set forth in this
discovery motion facts or information that establish-or even
suggest-the basis for his assertion that there is any
disagreement within the IRS that Joyce's liquidation of
IRS assets to buy privately-held stock was a proper rollover,
and not a distribution to the taxpayer. No. filing, including
a sealed ex parte affidavit in which Nardozzi could have
disclosed any sensitive defense information, identifies the
basis for Nardozzi's claim. Indeed, somewhat tellingly,
his submissions uniformly articulate his claim in conditional
and qualified terms. For instance:
The record of the [Joyce Appeal is] material to the . . .
defense in this case if it would indicate ambiguity in the
tax law forming the basis of the criminal charges in this
case and in particular with respect to early withdrawal of
SEP-IRA assets. See Doc. 60-1, at p. 1 (Discovery
If there is disagreement within the very agency responsible
for administering the tax code about the correctness of the
treatment used in a tax return, then the Defendant could not
have willfully prepared fraudulent tax returns because there
would be serious question[s] about whether the Joyces'
rollovers were improper . . . . See Doc. 63, at p.
Defendant maintains that the discovery sought could support
defendant's motion to dismiss the indictment because, if
there is an unresolved question within the IRS about the tax
reporting of the pertinent facts and figures in this case, it
supports a determination that Nardozzi did not have
sufficient notice that his reporting of the . . . Joyce's
. . . SEP-IRA rollovers constituted criminal conduct.
See Doc. 71, at p. 3.
The Motion seeks the records of the Joyces' protest
proceedings to show an inconsistency in the IRS agency's
interpretations of the SEP-IRA rollover analysis that