IRS Court Venue Selection for FBAR Filing Failure
In United States v. Bradley, 644 F.3d 1213 (11th Cir. 2011), the Eleventh Circuit held, inter alia, that venue for failure to file an FBAR properly lies in any district that houses a local IRS office, so long as the chosen venue does not create a constitutional hardship for the defendant.
As discussed above, the Bradleys and their company, Bio–Med Plus, Inc., engaged in multiple schemes to defraud the Florida and California Medicaid programs by causing them to pay for the same blood-derivative medications more than once, resulting in $39 million in profits. The Bradleys and their associates attempted to camouflage these profits by forming a Bahamas corporation and opening two Bahamas bank accounts in the corporation’s name. The Bradleys then arranged for millions of dollars to be transferred from their domestic accounts into the Barclays accounts. The Bradleys failed to check the appropriate box on Form 1040, Schedule B acknowledging their interest in a foreign financial account, and they also failed to file Treasury Department Form 90–22.1, Report of Foreign Bank and Financial Accounts (“FBAR”).
The Bradleys and their associates were convicted of a number of offenses and received sentences of varying lengths. Bradley III was sentenced to 300 months’ imprisonment, a term that included 60 months for failure to disclose a foreign financial interest as part of a pattern of illegal activity, under 31 U.S.C. §§ 5314 and 5322(b). He moved the district court for a judgment of acquittal on the FBAR count, arguing that venue had been improperly laid in the Southern District of Georgia. The district court disagreed and denied the motions, and Bradley III appealed.
The Eleventh Circuit noted that venue, in a criminal case, is constitutionally proper only in the district where the crime was committed, and that the failure to perform a legally required act occurs where the act is supposed to be performed. The FBAR instructions provide that the form may be filed in any district that houses a local IRS office. Accordingly, the court held that the government could bring an indictment in any of these districts, so long as no constitutional hardship was created. In this case, the court determined that the possibility that Bradley III could have filed the form in the Southern District of Georgia, the district where his returns were prepared and home to a local IRS office, was sufficient to establish venue in that district. Because no constitutional hardship was created for Bradley III, the court upheld the denial of Bradley III’s motion for a judgment of acquittal.