United States v. Coplan

Attorneys Robert Coplan, Martin Nissenbaum, and Richard Shapiro (the E&Y attorneys) (defendants) were employed by Ernst & Young, LLP. The E&Y attorneys were convicted of participating in a conspiracy in violation of 18 U.S.C. § 371 by designing and implementing tax shelters and improperly defending the shelters against Internal Revenue Service (IRS) audits. The objects of the alleged conspiracy included defrauding the United States by dishonestly obstructing a lawful government function and evading taxes. Regarding fraud, the United States argued that Shapiro coached Ernst & Young partner Thomas Dougherty to lie to the IRS. Dougherty admitted lying to the IRS, but he denied that Shapiro coached him to do so. The United States also argued that Nissenbaum knowingly prepared a false and misleading template for an IRS submission regarding one shelter. However, Dougherty admitted drafting the relevant IRS submission from another template, and Dougherty testified that Nissenbaum merely provided non-substantive comments to Dougherty. Regarding tax evasion, the United States argued that Shapiro played a critical role in the development, marketing, and audit defense of a shelter that lacked economic substance and thus generated sham tax losses. However, the United States presented no evidence that Shapiro was involved in developing or marketing that shelter. The United States implicitly acknowledged that Nissenbaum played a minor role (writing a short email) regarding the sham-loss shelter, but the United States argued that Nissenbaum was criminally responsible under Pinkerton v. United States because his coconspirators’ tax evasion was reasonably foreseeable to him. The E&Y attorneys appealed their § 371 convictions, arguing that (1) the United States’ conspiracy theory was not supported by § 371’s text, which did not mention the dishonest obstruction of a lawful government function, and (2) the evidence was legally insufficient to convict Shapiro and Nissenbaum of violating § 371.