Tax Fraud Indictment Against Evangelist Dismissed For Prosecutorial Misconduct

In United States v. Cerullo, 2007 U.S. Dist. LEXIS 58142 (SD CA, Aug. 8, 2007), a San Diego, California federal district judge dismissed a tax evasion indictment against evangelist Morris Cerullo on the grounds of prosecutorial misconduct that misled the grand jury. The court found: "During the prosecutor's presentation, the grand jury asked at least three times about how to differentiate between earned income and gifts. Each time the prosecutor answered without mentioning the most critical factor: the donor's intent. And each time he told the grand jury to listen to the testimony of the Internal Revenue Service Agent." The testimony of the IRS agents however was incorrect and misleading. The court went on to say:

this case illustrates the specter of a federal tax prosecution that faces every clergyman, minister, rabbi, and cleric who receives money after delivering a sermon. Such tax cases must be considered by government prosecutors with great care lest the Government trench on rights afforded by the Free Exercise Clause and convert that which is a guaranteed liberty into a federal crime. In this case, the prosecutor did not exercise that necessary care before the grand jury. Consequently, the grand jury was misled on the law, was unable to correctly adjudge the evidence, and no longer operated as an independent body and buffer between the Government and the Defendant.

Today's San Diego Union-Tribune reports on the decision.