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United States v. El-Bey

United States Court of Appeals, Seventh Circuit

October 24, 2017

United States of America, Plaintiff-Appellee,
v.
Hakeem El-Bey, Defendant-Appellant.

          Argued January 5, 2017

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 14 CR 447- Richard A. Posner, Circuit Judge. [*]

          Before Wood, Chief Judge, and Manion and Williams, Circuit Judges.

          PER CURIAM.

         Hakeem El-Bey filed six tax returns with the Internal Revenue Service seeking $1.8 million in tax refunds to which he was not entitled. He received $600, 000 from the IRS as a result of two of the returns, which he used to purchase a house and numerous cars. El-Bey represented himself on charges of mail fraud and making false claims to the IRS. He advanced irrelevant arguments, interrupted the judge, and made it challenging to manage the trial. On appeal, El-Bey seeks a new trial. Although the district court was understandably frustrated by a difficult litigant, El-Bey had a right to a fair trial, and we cannot be assured that he received one. Statements by the court in the presence of the jury conveyed that El-Bey was guilty or dishonest and impaired El-Bey's credibility in the eyes of the jury We remand the case for a new trial.

         I. BACKGROUND

         In August 2009, Hakeem El-Bey a self-described Moorish national, created an Employer Identification Number with the IRS for the Hakeem El-Bey Trust, naming himself as the trustee and fiduciary. Between August 2009 and November 2010, El-Bey filed a total of six tax returns by mail with the IRS in the name of the trust, each seeking a $300, 000 refund. Each return was essentially identical: each claimed $900, 000 in trust income, $900, 000 in fees, $7, 590 in exemptions, and $300, 000 in withholding. El-Bey signed each return, identifying himself as the fiduciary of the trust, and listed his date of birth as the date of trust creation. El-Bey mailed three returns in the same envelope to the IRS in August 2009. The IRS flagged these returns as frivolously filed and mailed three letters to El-Bey informing him he would be assessed a $5, 000 penalty per return if he failed to file a corrected return within twenty days.

         In November 2009, El-Bey returned the three letters by mail to the IRS and included various vouchers and tax forms bearing no relation to the returns. El-Bey filed the fourth identical tax return in December 2009. Based on this return, the IRS issued and mailed a $300, 000 refund check to "Hakeem El Bey Trust, Hakeem El Bey Trustee." El-Bey received and deposited the check into a bank account and used the funds to cover personal expenses, to purchase two vehicles, and to buy a house. He filed the fifth identical return in May 2010. Again, the IRS issued and mailed a $300, 000 refund check to the Trust. El-Bey deposited the check into a new account and used the funds for personal expenses and to purchase five vehicles. Finally, in November 2010, El-Bey filed the sixth return, but the IRS did not issue a refund to him for this return.

         IRS criminal investigators interviewed El-Bey and he admitted he signed and filed the returns, and received and deposited the checks. El-Bey did not explain how he came up with the numbers on the return and refused to answer questions regarding the $300, 000 withholding amount, though he did eventually admit he had not received $900, 000 each year as the Trust fiduciary. He was indicted on two counts of mail fraud, in violation of 18 U.S.C. § 1341, and six counts of making false claims to the IRS, in violation of 18 U.S.C. § 287.

         A. Proceedings Before Trial Judge

         El-Bey filed a motion to proceed without counsel and represent himself. The district court granted this motion to proceed pro se, and appointed standby counsel over El-Bey's objection. Gabriel A. Fuentes, El-Bey's standby counsel, appeared at every substantive proceeding in the district court until he was discharged following El-Bey's sentencing hearing. Fuentes did not act as or purport to be El-Bey's counsel, and El-Bey repeatedly and emphatically objected to Fuentes's presence.

         Before trial, El-Bey filed numerous motions related to admiralty law, the Uniform Commercial Code, and the Federal Rules of Civil Procedure. Although irrelevant to the criminal proceedings, the motions pertained to El-Bey's sovereign citizen beliefs. See El v. AmeriCredit Fin. Serv., Inc., 710 F.3d 748, 750 (7th Cir. 2013) ("Sovereign citizens view the USG [U.S. government] as bankrupt and without tangible assets ... [and] exploit this belief by filing fraudulent financial documents charging their debt to the Treasury Department." (quotation marks and citation omitted)); see also Bey v. State, 847 F.3d 559, 560-61 (7th Cir. 2017). The district court ruled that evidence and testimony concerning El-Bey's sovereign citizen affiliation or views were to be excluded from the jury's consideration. It advised El-Bey that non-compliance with this ruling could cause him to be excluded from court.

         At trial, two IRS representatives testified for the government regarding El-Bey's tax returns and the three letters and two refund checks that the IRS sent him. During cross-examination of the government's first witness, IRS Representative Kristy Morgan, El-Bey asked whether it was her understanding that compliance with federal tax laws was voluntary. Morgan responded:

The tax laws are based on individuals taking their information, voluntarily putting them on the tax returns, and mailing them to the IRS. However, the law states if you don't do that the IRS can come in and file for you because the law states you file and pay your income tax.

         El-Bey continued, "Now, you just contradicted yourself. Because in one case you are saying that the IRS is saying filing taxes is voluntary compliance?" At this point, the court interjected and the following exchange took place in the presence of the jury:

THE COURT: Look, paying taxes is not voluntary.
THE DEFENDANT: That's what it says here. I'm not ...

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