United States v. Albert J. Pirro, Jr., Anthony G. Pirro

JOHN R. GIBSON, Circuit Judge:

The United States appeals from an order of the district court dismissing allegations of an indictment charging Albert Pir-ro with failing to report the ownership interest of the Chairman2 of the Board of Hudson Valley Hospital Center on the income tax return of Distinctive Properties of Croton, Inc., an S Corporation, in violation of 26 U.S.C. § 7206(1). The dismissed allegations also charge Pirro with misstating his own ownership interest in Properties and failing to reflect all payments that Properties made to a company wholly owned by the Chairman. The government argues that the district court erred in dismissing these allegations. We affirm.

The dismissed allegations form only a portion of Count 67 of the indictment. The count alleges that early in 1991, the Chairman brought to Pirro’s attention the availability of a commercial office building in Croton, New York. Properties purchased the building for $950,000 and leased it to Hudson Valley Ventures, Inc. Ventures planned to use the building as a professional building and lease space to physicians affiliated with the Hospital.3

While Ventures leased the building, it made lease payments and other payments related to the building’s operation to Properties. Also during that time, Properties made a series of payments by check to PM Messenger, a company wholly owned and controlled by Pirro. Messenger then made checks payable in the precise amount received from Properties to a company wholly owned by the Chairman. These payments totaled $135,726.70. In July 1993, Ventures purchased the building from Properties for $1,500,000. After Properties closed on the sale of the building to Ventures, another company wholly owned by Pirro made a payment by check in the amount of $156,572.57 to the Chairman’s company.

Count 67 alleges that the Chairman acquired a 45% “ownership interest” in Properties at or about the same time Properties closed on the purchase of the building. *88It also alleges that Pirro assisted the Chairman in concealing his ownership interest in Properties and his receipt of the monies from Messenger in violation of what Pirro believed to be the Chairman’s fiduciary duty and duty of disclosure to the Hospital and its parent corporation.

The remaining counts of the indictment charge either Pirro or his brother, or both, with conspiracy to violate the tax laws and with numerous violations of 26 U.S.C. §§ 7201, 7206(1), and 7206(2). They allege, among other things, that Pirro’s various businesses paid for his personal expenses and that the tax returns for these companies disguised the expenditures as business expenses. Pirro’s brother allegedly assisted in the preparation of the false returns.

The crime alleged in .Count 67 is that Pirro willfully and knowingly made and subscribed a false 1992 tax return for Properties in violation of section 7206(1). Pirro’s motion to dismiss challenged only subpart (2) of paragraph 66 in Count 67,4 claiming that it failed to state an offense. Subpart (2) alleged that Pirro:

failed to report thereon the hospital Chairman’s ownership interest in [Properties], misstated thereon ALBERT J. PIRRO, JR.’s ownership interest in [Properties], and failed to reflect thereon all of the payments [Properties] had made, through [Messenger], to the hospital Chairman’s wholly owned company.

The district court held that Pirro’s motion was properly before it, as- the failure of an indictment to charge an offense can be addressed at any time. The court stated that an indictment may be dismissed where the government’s theory of liability is legally insufficient and that the existence of a known legal duty owed by a taxpayer is a question of law. The court found that whether there is a legal obligation to include an individual with an “ownership interest” on the tax return of an S corporation is debatable and thus should not supply the predicate for criminal liability. The district court further explained that lack of clarity in the law should be resolved in a defendant’s favor.

The court pointed out that the law relating to S corporations repeatedly refers to shareholders and rejected the government’s argument that “de facto shareholder” or “ownership interest” was congruent with “shareholder.” The court concluded that the government had not shown that Pirro was required to report the Chairman’s ownership interest in Properties under the relevant provisions of Subchapter S.

I.

As a threshold issue we must consider whether we have jurisdiction over the appeal of an order dismissing a portion of a count. In Sanabria v. United States, 437 U.S. 54, 69 n. 23, 98 S.Ct. 2170, 57 L.Ed.2d 43 (1978), the Supreme Court stated that there is no statutory barrier to such an appeal. Statutory authority permits a government appeal from an order of a district court dismissing any one or more counts of an indictment. See 18 U.S.C. § 3731 (1994). In United States v. Tom, 787 F.2d 65, 71 (2d Cir.1986), we pointed out that our circuit interprets this authority to allow an appeal of a dismissal of an allegation that could have provided a discrete basis for a conviction. We reviewed dismissals of portions of counts in United States v. Margiotta, 646 F.2d 729 (2d Cir.1981), and United States v. Alberti, 568 F.2d 617 (2d Cir.1977).5

*89Here, the district court dismissed only subpart (2) of paragraph 56. Pirro’s alleged failure to report the ownership interest of the Chairman (and the other related allegations of subpart (2), see note 6, infra) is completely different from the crimes alleged in the other counts of the indictment and the allegations of subpart (1) of Count 67. Subpart (2) provides a discrete basis for conviction. Accordingly, it falls within the rulings of Margioita and Alberti. The dismissal of these allegations is thus appealable.

II.

Pirro contends that the portion of the indictment he challenges fails to allege a crime because it states only that the Hospital Chairman had an “ownership interest” in Properties, which does not necessarily mean that he was a shareholder. Pirro argues that only those deemed “shareholders” have to be reported as shareholders, and that failure to name.a non-shareholder in a tax return is not a falsehood.

The indictment in this case alleged a violation of 26 U.S.C. § 7206(1), which makes it a crime to

willfully [make and subscribe] any return, statement, or other document which contains or is verified by a written declaration that it is made under the penalties of perjury, and which [the maker] does not believe to be true and correct as to every material matter.

Thus, the elements of a section 7206(1) violation are:

(1) that the defendant made or caused to be made, a federal income tax return for the year in question which he verified to be true; (2) that the tax return was false as to a material matter; (3) that the defendant signed the return willfully and knowing it was false; and (4) that the return contained a written declaration that it was made under the penalty of perjury. A false statement is “material” when it has “the potential for hindering the IRS’s efforts to monitor and verify the tax liability” of the corporation and the taxpayer.

United States v. Peters, 153 F.3d 445, 461 (7th Cir.1998) (citations omitted), cert. denied, 525 U.S. 1070, 119 S.Ct. 801, 142 L.Ed.2d 663 (1999); see United States v. Scholl, 166 F.3d 964, 979-80 (9th Cir.), cert. denied, — U.S. —, 120 S.Ct. 176, 145 L.Ed.2d 149 (1999).

The false statement alleged in the challenged portion of Count 67 is that, in filing the 1992 tax return for Properties, Pirro “failed to report thereon the hospital Chairman’s ownership interest in [Properties].” 6

The indictment alleges Pirro filed a Form 1120-S (U.S. Income Tax Return for an S corporation) for Properties without including a Schedule K-l for the Chairman. Schedule K-l, which is attached to Form 1120-S, is entitled “Shareholder’s Share of Income, Credits, Deductions, etc.” and requires the shareholder’s identifying number, shareholder’s name and address, and shareholder’s percentage of stock ownership for the tax year. Pirro executed two Schedules K-l that were attached to the 1992 tax return for Proper*90ties. One identified him as a shareholder owning 90% of the stock, and the other identified Paul J. Monsell as a shareholder owning 10%. The tax code requires that the return of an S corporation include “the names and addresses of all persons owning stock in the corporation ... [and] the number of shares of stock owned by each shareholder_” 26 U.S.C. § 6037(a) (Supp. Y 1987). Other than shareholder, no other ownership interests of any kind are required to be listed on the Schedule K-l, and Pirro did not purport to list any other interests.

The applicable statutes and regulations, as well as the forms' required to be filed thereunder, refer only to shareholders and stock. The statutes relating to S corporations specifically refer on numerous occasions to shareholders and to holding stock in the corporation. See, e.g., 26 U.S.C. § 1361(b)(1) (1982) (S corporation cannot “have more than 35 shareholders,” “have as a shareholder a person ... who is not an individual,” “have a nonresident alien as a shareholder,” or “have more than 1 class of stock”); 26 U.S.C. § 1362(a)(2) (1982) (entitled “All shareholders must consent to election”); 26 U.S.C. § 1366 (1982) (entitled “Pass-thru of items to shareholders”); 26 U.S.C. § 6037 (see discussion in previous paragraph). In addition, the relevant regulation refers only to stock and shareholders. See 26 C.F.R. § 1.6037-l(a) (1992) (tax return for S corporation shall include “[t]he names and addresses of all persons owning stock in the corporation” along with “[t]he number of shares of stock owned by each shareholder”). Finally, the Schedule K-l on which the allegations are based refers only to shareholder and stock ownership.

A.

The government and Pirro battle over whether there is a known legal duty for Pirro to declare the alleged “ownership interest” of the Chairman.7 Pirro argues that there was no legal obligation requiring S corporations to report as shareholders on their tax returns holders of unspecified “ownership interests.” The district court held that a perusal of the code and regulations did not compel the conclusion that “ownership interest” was congruent with “shareholder.” The district court further stated that there was nothing in the indictment, responses to request for particulars, or in the government’s response to the motion to dismiss alleging that the Chairman ever elected to become a shareholder of Properties. Accordingly, the court held that Pirro could not be said to have violated a known legal duty imposed by the tax code and regulations in failing to reflect the Chairman’s “ownership interest” on the 1992 return.

Indeed, the government has conceded that there was no' statute or regulation that specifically stated that S corporations were required to report “ownership interests” on their corporate tax' returns, nor has it provided Second Circuit or Supreme Court authority that so states.

This court has held in United States v. Regan, 937 F.2d 823 (2d Cir.1991):

One of the most esoteric areas of the law is that of federal taxation. It is replete with “full-grown intricacies”, and it is rare that a “simple, direct statement of the law can be made without caveat.” 1 Mertens Law of Federal Income Tax § 1.01.... [P]roóf of guilt in such cases must be predicated upon a voluntary, intentional violation ■ of a known legal duty.

Id. at 827 (citations and internal quotations omitted); see also United States v. Bok, 156 F.3d 157, 165 (2d Cir.1998) (“[W]illfulness under the tax laws requires a voluntary, intentional violation of a known legal duty.”) (citation and internal quotations *91omitted). While these cases refer to proof at trial, this principle has application-as well to an indictment, where criminal liability for perjury turns on an underlying violation of tax law. .

The tax law provided Pirro no notice that failure to report an “ownership interest” was criminal. In United States v. Harris, 942 F.2d 1125, 1131 (7th Cir.1991), the Seventh Circuit held that an indictment must be dismissed where “current law on the tax treatment of payments to mistresses provided Harris no fair warning that her conduct was criminal,” and because “new points of tax law may not be the basis of criminal convictions.” The court referred to a civil case discussing the distinction between income and gifts, and stated:

[C]riminal prosecutions are a different story. These must rest on a violation of a clear rule of law.... If “defendants [in a tax case] ... could not have ascertained the legal standards applicable to their conduct, criminal proceedings may not be used to define and punish an alleged failure to conform to those standards.” United States v. Mallas, 762 F.2d 361, 361 (4th Cir.1985).

Id.

Similarly in Mallas, the Fourth Circuit reversed the defendants’ convictions for tax evasion that arose out of a tax shelter program because they rested “on an unsubstantiated theory of tax law.” 762 F.2d at 363. The court stated:

“It is settled,” this court observed in the analogous criminal tax case of United States v. Critzer, “that where the law is vague or highly debatable, a defendant — actually or imputedly — lacks the requisite intent to violate it.” 498 F.2d 1160, 1162 (4th Cir.1974). Criminal prosecution for the violation of an unclear duty itself violates the clear constitutional duty of the government to warn citizens whether particular conduct is legal or illegal.

Id. Because only willful conduct is criminal under section 7206 and because willfulness requires a voluntary intentional violation of a known duty, “the duty involved must be knowable.” Id.

The government contends that numerous civil cases establish that beneficial or de facto ownership controls for tax purposes, citing Cabintaxi Corp. v. Commissioner, 63 F.3d 614 (7th Cir.1995), Wilson v. Commissioner, 560 F.2d 687 (5th Cir.1977), Kean v. Commissioner, 469 F.2d 1183 (9th Cir.1972), and Hoffman v. Commissioner, 47 T.C. 218, 1966 WL 1116 (1966). It is significant that the indictment alleged that the Chairman had an ownership interest, a term that obviously includes interests that Pirro would have had no duty to report, but did not allege that he was a beneficial owner or a de facto shareholder.

The government also relies on United States v. Biaggi, 909 F.2d 662, 680-81 (2d Cir.1990), and United States v. Ingredient Technology Corp., 698 F.2d 88, 94-95 (2d Cir.1983), to establish that Pirro violated the law by not reporting the Chairman’s interest in Properties. Both cases, however, are distinguishable as neither addressed the duty of a defendant to report another’s alleged ownership interest in an S corporation.

We conclude that the indictment does not charge a violation of a known legal duty.

B.

Pirro also argues that the indictment fails to allege the essential facts constituting the offense charged. A criminal defendant is entitled to an indictment that states the essential elements of the charge against him. See Jones v. United States, 526 U.S. 227, 232, 119 S.Ct. 1215, 143 L.Ed.2d 311 (1999); Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 41 L.Ed.2d 590 (1974) (“[A]n indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to *92plead an acquittal or conviction in bar of future prosecutions for the same offense.”); Fed.R.Crim.P.7(c). An indictment that fails to allege the essential elements of the crime charged offends both the Fifth and Sixth Amendments. See Russell v. United States, 369 U.S. 749, 760-61, 82 S.Ct. 1038, 8 L.Ed.2d 240 (1962).

The Fifth Amendment guarantees that “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury....” If the indictment does not state the essential elements of the crime, the defendant cannot be assured that he is being tried on the evidence presented to the grand jury, see Russell, 369 U.S. at 770, 82 S.Ct. 1038; United States v. Walsh, 194 F.3d 37, 44 (2d Cir.1999), or that the grand jury acted properly in indicting him. See Russell, 369 U.S. at 768-69, 82 S.Ct. 1038 (An important corollary purpose of requirement that indictment state elements of offense is to allow court to evaluate whether facts alleged could support conviction.) See generally United States v. Wydermyer, 51 F.3d 319, 324 (2d Cir.1995) (pleading requirement at common law was “security against the arbitrary multiplication of offenses”); 2 Wayne R. LaFave and Jerold H. Israel, Criminal Procedure § 19.2 at 436, 448-49 (1984) (“[T]he requirement that the offense be stated ... specifying in detail each element of the crime, was seen as providing assurance both that the grand jury understood what was necessary to establish an offense and that the courts did not engage in unanticipated extensions of the substance of the offense.”). “The Indictment Clause of the Fifth Amendment requires that an indictment contain some amount of factual • particularity to ensure that the prosecution will not fill in elements of its case with facts ‘other than those considered by the grand jury.” Walsh, 194 F.3d at 44 (internal quotations omitted). As the Supreme Court stated in Russell:

To allow the prosecutor, or the court, to make a subsequent guess as to what was in the minds of the grand jury at the time they returned the indictment would deprive the defendant of a basic protection which the guaranty of the intervention of a grand jury was designed to secure. For a defendant could then be convicted on the basis of facts not found by, and perhaps not even presented to, the grand jury which indicted him.

369 U.S. at 770, 82 S.Ct. 1038.

The Sixth Amendment guaranty of the defendant’s right “to be informed of the nature and cause of the accusation” against him is also offended by an indictment that does not state the essential elements of the crime. Russell, 369 U.S. at 761, 82 S.Ct. 1038; see also Walsh, 194 F.3d at 44.

Because the requirement of a sufficient indictment serves these important purposes, the indictment must be considered as it was actually-drawn, not as it might have been drawn. See Sanabria v. United States, 437 U.S. 54, 65-66, 98 S.Ct. 2170, 57 L.Ed.2d 43 (1978) (“The precise manner in which an indictment is drawn cannot be ignored.... ”). The sufficiency of the indictment is a matter of law that is reviewed de novo. See United States v. Velastegui, 199 F.3d 590, 593 (2d Cir.1999). The timing of the defendant’s objection is important to the level of scrutiny employed; a defendant who objects to the indictment before trial, as Pirro has done, is entitled to a more exacting review of the indictment than one who waits until after trial to object. See United States v. Goodwin, 141 F.3d 394, 401 (2d Cir.1997); Wydermyer, 51 F.3d at 324-25.

Under modern pleading rules, “we have consistently upheld indictments that ‘do little more than to track the language of the statute charged and state the time and place (in approximate terms) of the alleged crime.’ ” Walsh, 194 F.3d at 44 (quoting United States v. Tramunti, 513 F.2d 1087, 1113 (2d Cir.1975)). The Supreme Court, *93however, has recognized a limitation on this practice, so that

“where the definition of an offence, whether it be at common law or by statute, includes generic terms, it is not sufficient that the indictment shall charge the offence in the same generic terms as in the definition; but it must state the species, — it must descend to particulars.” United States v. Cruikshank, 92 U.S. 542, 23 L.Ed. 588 [1875].... “Undoubtedly, the language of the statute may be used in the general description of an offense, but it must be accompanied with such a statement of the facts and circumstances as will inform the accused of the specific offense, coming under the general description, with which he is .charged.” United States v. Hess, 124 U.S. 483, 487, 31 L.Ed. 516 [1888].

Russell, 369 U.S. at 765, 82 S.Ct. 1038. For instance, in Russell the defendants were charged with refusing to answer a question pertinent to the subject under inquiry before a congressional subcommittee, but the indictments did not say what the subject under inquiry was. The indictments neither notified the defendants of the gist of the charges against them, nor allowed the court to ascertain that the charges were legally valid. Id. at 767-69, 82 S.Ct. 1038. The Supreme Court therefore reversed the convictions based on the defective indictment. Id. at 755, 82 S.Ct. 1038. Under the same principle, where an indictment charges a crime that depends in turn on violation of another statute, the indictment must identify the underlying offense. See LaFave, supra, at 452; 1 Charles Alan Wright, Federal Practice and Procedure: Criminal 3d § 124 at 549 (1999). Similarly, when “one element of the offense is implicit in the statute, rather than explicit, and the indictment tracks the language of the statute and fails to allege the implicit element explicitly, the indictment fails to allege an offense.” United States v. Foley, 73 F.3d 484, 488 (2d Cir.1996), abrogated on other grounds, United States v. Santopietro, 166 F.3d 88, 92-93 (2d Cir.1999). In sum, for an indictment to fulfill the functions of notifying the defendant of the charges against him and of assuring that he is tried on the matters considered by the grand jury, the indictment must state some fact specific enough to describe a particular criminal act, rather than a type of crime.

The indictment failed to sufficiently allege the second element of a section 7206(1) violation, namely a material falsehood or an omission that amounted to a material falsehood. In this case, the allegation is that Pirro omitted something from a tax return. An omission cannot amount to a false statement, ■ which is an essential element of a section 7206(1) violation, without the crucial background fact that gives rise to the duty to disclose the fact that was omitted. Only the omission of facts required to be reported constitutes a material falsehood. The indictment must therefore allege what made the omission in this case criminal.

And indeed the government purports to identify the respect in which the return as filed was incorrect; the problem is that the government’s allegation might or might not make the return incorrect, and in violation of section 7206(1). It alleged that the Chairman had an “ownership interest” in Properties when in fact, “ownership interest” is a broader category than “share ownership.” The government seemingly admits that “ownership interest” is not specific by persisting in using, in its briefs and at- argument, the terms beneficial or de facto ownership of shares as opposed to the indictment’s term “ownership interest.” 8 The most that omitting a Schedule K-l could be said to imply is that there were no other shareholders in Properties besides Pirro and Monsell. This would be *94a misstatement if in fact there were other shareholders. However, the indictment itself does not allege that the Chairman was a shareholder, in those words or any other words legally equivalent. Instead, it refers to the Chairman as having an “ownership interest” in Properties.

Here, the allegation is that the “ownership interest” of the Chairman was not reported. “Ownership interest” is a generic term that does not descend to particulars. Cf. Russell, 369 U.S. at 765, 82 S.Ct. 1038. The government strongly argues that the Chairman was a de facto shareholder, held a beneficial interest or that Pirro was a nominee, but the indictment did not use those particular terms.

The government’s use of the term “ownership interest” rather than “stock ownership” was not inadvertent, since the government chose not to respond meaningfully to Pirro’s request for a more specific description. Following up to his request for a bill of particulars, Pirro specifically requested that the government:

Identify the nature of the “ownership interest” allegedly acquired by the hospital Chairman in [Properties], including (a) the date such an interest was acquired, (b) any consideration paid by the hospital Chairman to acquire this interest, (c) any documents evidencing the hospital Chairman’s ownership of such an interest, and (d) and statute, regulation or other authority supporting the allegation that the hospital Chairman acquired an “ownership interest” in [Properties].

In light of the government’s statement that the Chairman’s interest should have been disclosed on a Schedule K-l, Pirro also requested it to “identify (a) the page and line reference of a Schedule K-l where such interest should have been so reflected; and (b) the statute, regulation, or other tax authority requiring the disclosure of such alleged interest on a Schedule K-l.” The government chose not to specify the nature of the Chairman’s alleged interest, but instead answered the first request by saying that if the information could not be gleaned from the indictment, discovery materials, and the particulars already provided, it was “not properly the subject of a bill of particulars.” In response to Pirro’s request regarding the K-l, the government stated that “a Schedule K-l should have been filled out in its entirety for the hospital Chairman” and that the authority requiring the disclosure was not a proper subject of a bill of particulars.

Thereafter, Pirro filed a motion to strike the allegations because they did not state a violation of section 7206(1). In defending against the motion to strike, the government argued that “beneficial” or “de facto” ownership controls for tax purposes rather than defending the actual words it used in the indictment. In briefing the case before this court, the government referred to Pirro as a “nominee” for the first time.9 It is also evident that the government has made use of “shareholder” and “share ownership” not only in the statement of issues, but substantially throughout its brief. Cf. Russell, 369 U.S. at 768, 82 S.Ct. 1038 (“At every stage in the ensuing criminal proceeding [the defendant] was met with a different theory, or by no theory at all, as to what the topic [under inquiry] had been.”).

The government argues that the court should infer “shareholder interest” from the more general term “ownership interest.” This argument is rejected. This *95court faced an indictment with the same kind of defect in United States v. Berlin, 472 F.2d 1002, 1008 (2d Cir.1973). There, the defendant was charged with aiding and abetting another in submitting false documents to a savings and loan. An essential element of the crime was knowledge of the falsity of the documents, but there was no allegation of knowledge, only that the defendant “counseled and caused” the other person to submit the documents. The government argued that the indictment was good enough because “counseled and caused” meant about the same thing as knowledge. Id at 1007. This court rejected the government’s argument:

With this argument we cannot agreé. One can counsel and cause another to utter a statement that one only later learns to be untrue. Therefore, Berlin's knowledge of the falsity at the time he caused the statements to be made is not necessarily implied from the allegation that he “eounseléd and caused” the statements to be made.

Id. at 1007-08: We reversed the conviction based on the inadequate indictment. Id. at 1010. Accord United States v. Morrison, 536 F.2d 286, 289 (9th Cir.1976) (allegation that defendant “converted” property not sufficient to allege theft, since conversion may or may not involve intent).

The indictment alleges the omission of a fact that Pirro might not have been required to report. When alerted to this, the government failed to take advantage of the request for a bill of particulars to make the general term “ownership interest” more specific and legally sufficient.10 Count 67, subpart (2) of paragraph 56 failed to state the essential element of a material misrepresentation. Accordingly, Pirro was not adequately informed of the nature of the accusation against him, as is his right under the Sixth Amendment. For the same reasons, the grand jury may not have understood the elements of the crime and the evidence necessary to support the indictment, as required by the Fifth Amendment.

We affirm the judgment of the district court dismissing subpart (2) of paragraph 56 in Count 67 of the indictment.

. The indictment refers to the Chairman without naming him, although the briefs do so. We think it appropriate to use the title Chairman as used in the indictment.-

. Ventures and the Hospital were both owned by the same parent corporation, Westchester-Pulnam Health Management Services, Inc.

. Subpart (1) alleged that Pirro disguised personal expenses as business expenses and deducted rental real estate expenses that he knew were not legitimate on the 1992 tax return for Properties.

. A number of decisions from other circuits agree that a dismissal of a portion of a count is appealable. See, e.g., United States v. Serafini, 167 F.3d 812, 814-16 (3d Cir.1999); United States v. Bloom, 149 F.3d 649, 652-54 (7th Cir.1998); United States v. Oakar, 111 F.3d 146, 149-150 (D.C.Cir.1997).

. Count 67, subpart (2) actually contains three allegations: that Pirro “failed to report [on the Properties Form 1120-S] the hospital Chairman’s ownership interest in [Properties], misstated thereon ALBERT J. PIRRO, JR.’s ownership interest in [Properties], and failed to reflect thereon all of the payments [Properties] had made, through [Messenger] to the hospital Chairman's wholly owned company.” The district court did not consider these latter two allegations separately from the allegation about failing to disclose the Chairman's interest. On appeal, the government argues in a footnote that failure to disclose the payments to the Chairman is “an entirely discrete basis for criminal liability.” This one-sentence footnote is insufficient to preserve the issue for appeal. See Concourse Rehab. & Nursing Ctr., Inc. v. DeBuono, 179 F.3d 38, 47 (2d Cir.1999); United States v. Restrepo, 986 F.2d 1462, 1463 (2d Cir.1993) (“We do not consider an argument mentioned only in a footnote to be adequately raised or preserved for appellate review.”).

. Judge Katzmann concurs in the judgment based on Section II.A of this opinion, that Subchapter S corporations had no known legal duty to report “ownership interests” because there were no statutes, regulations, or dispositive case law stating that S corporations were required to report such interests.

. The indictment in paragraphs 52 and 53 alleges the payments from Properties to Messenger and from Messenger to the Chairman’s wholly-owned company. There is no allegation, however, as to how these payments create an ownership interest.

. In contrast to Subchapter S’s focus on shareholders, the tax law regarding partnerships refers to “nominees” of partnership interests. A partnership that is required to file a tax return must furnish "each person who is a partner or who holds an interest in such partnership as a nominee for another person” with a copy of the information required on the return. 26 U.S.C. § 6031(b) (Supp. V 1987). Further, the nominee must give the partnership the name and address of the person for whom he or she holds the interest and give that person the information regarding the partnership’s return. See 26 U.S.C. § 6031(c) (Supp. V 1987).

. This is not to suggest that a bill of particulars could have saved an otherwise defective indictment. See Russell, 369 U.S. at 770, 82 S.Ct. 1038 ("[I]t is a settled rule that a bill of particulars cannot save an invalid indictment."). The government had notice of Pir-ro’s objection to the challenged portion of the indictment, and could have, but did not, file a superseding indictment.