Article: 19861101067

Title: CASE IN POINT

19861101067
198611010067
HighTimes_19861101_0013_135_0067.xml
CASE IN POINT
NEW FEDERAL LAW MAKES IT DIFFICULT TO HIRE LAWYER
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High Time
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article
One of the new provisions of the new federal law which is troubling lawyers quite a bit is a change in the Internal Revenue Code. Effective January 1, 1985, any person who receives more than $10,000 in cash, in one or more related transactions, is required to report the transaction to the IRS and to issue a written annual statement to the person who paid the money.
ROBERT FOGELNEST
80

CASE IN POINT

NEW FEDERAL LAW MAKES IT DIFFICULT TO HIRE LAWYER

ROBERT FOGELNEST

One of the new provisions of the new federal law which is troubling lawyers quite a bit is a change in the Internal Revenue Code. Effective January 1, 1985, any person who receives more than $10,000 in cash, in one or more related transactions, is required to report the transaction to the IRS and to issue a written annual statement to the person who paid the money. The person who receives the money must report the name, address, and identifying number of the person from whom he received the money, the date and the nature of the transaction as well as “such other information as the Secretary of the Treasury may require.” Lawyers are now required to inform the 1RS when a client pays a cash fee in excess of $10,000. It is not unlikely that those attorneys submitting forms will find themselves called as government witnesses against their own clients and also disqualified from representing the clients.

The statue defines cash as either U.S. or foreign currency. Thus it appears as if a lawyer could be paid in gold, diamonds, real estate, money orders or a Mercedes without having to file a form with the 1RS, but receipt of cash triggers the reporting requirements. Knowledgeable attorneys are concerned that advising a client of some method to avoid filing the forms, such as bringing in a cashier’s check under $10,000 could result in the government indicting both the client and the lawyer and claiming a conspiracy to obstruct justice. Just as no ethical, competent attorney would ever consider even arguably violating the law and thereby

rendering himself less able to protect a client’s rights, similarly no competent lawyer wishes to find himself in the position of being ethically bound to protect a client’s confidences but also being required by law to report what may well be evidence of tax evasion and thereby become a witness against the person who has sought the attorney’s aid. An informal survey of attorneys on both the NORML legal committee and the National Association of Criminal Defense Lawyers has not suggested an ethical, workable solution to this monumental problem which will certainly occur in some cases.

The new law will also make it difficult for people to retain lawyers by virtue of its forfeiture provisions. Under the new law, any felony drug offense carries with it a provision for the forfeiture of any property which was derived from the crime for which a person was convicted. The government can also claim forfeiture of property which was used or intended to be used to commit or facilitate the crime, such as a car or house. Moreover, the law provides that the property in question, whether in be an airplane or cash, vest in the United States at the time that the offense was committed. In short, this means that money which was made illegally cannot be used to pay an attorney or for that matter anyone else.

It has always been difficult for the government to produce direct evidence that property constitutes or was purchased with the proceeds of illegal drug transactions. The new law, however, provides for a presumption in the government’s favor that all the property of a person convicted of a drug felony is subject to forfeiture if the government can establish two things. First, that the defendant acquired the

A monthly report on drugs and the law. Written in consultation with Kevin Zeese, NORML Chief Counsel.

property at, or reasonably after the time of the crime; also, that the person convicted had no likely source for the property other than the crime. Thus, an attorney defending a person in a felony drug case, runs the risk that if his or her client is convicted, and unable to show that the money used to pay the fee was either acquired before the time of the violation or that the client had another source for the money other than the violation, the attorney may have to turn over the fee to the United States government. This provision could well deter some of the better and busier criminal defense lawyers from accepting drug cases for fear that after devoting a substantial amount of time and energy to a case, they will be required to turn their fee over to the government or at the very least engage in extensive litigation in an attempt to keep it. Some lawyers suspect that this is exactly what the Department of Justice wanted to accomplish.

The lawyers are already fighting this at tempt by the government to interfere with the constitutional right to counsel, and with some success. On February 22, 1985 in the case of United States v. Gerald L. Rogers, et a!., United States District Court Judge John Kane of Denver ruled that attorneys' fees are not forfeit able if they were received by the lawyer "in return for services lefimately ren dered. . . and not as part of an artifice or sham to avoid forfeiture." This is the first ruling on this problem. The government will almost certainly appeal the ruling up to the United States Supreme Court.

In ruling that the lawyers fees weren’t to be forfeited Judge Kane stated:

“The government would possess the ultimate tactical advantage of being able to exclude competent counsel as it chooses. By appending a charge of forfeiture... the prosecutor could exclude those defense counsel which he felt to be skilled adversaries.”

You can bet your bottom asset (forfeitable or not) that the prosecutors want that tactical advantage. They know full well that there are a limited number of lawyers who possess the dedication, desire, knowhow, and ability to fully protect the rights of a person accused in a drug case. If the prosecutors can effectively limit the lawyers who do the best job for the accused from getting paid they will have won a major battle in the “War on Drugs”. They also will have caused major damage to the Constitution. We’ll see. •