Justia White Collar Crime Opinion Summaries

Black repeatedly tried to pay off a more than $5 million tax debt with checks drawn on checking accounts that he knew were closed to prevent the IRS from collecting taxes from him. A jury convicted Black of one count of obstructing and impeding the IRS from collecting taxes and four counts of passing and presenting fictitious financial instruments with intent to defraud. The district court sentenced Black to 71 months in prison. The Seventh Circuit vacated and remanded for resentencing, agreeing that the district court erred in determining his sentencing range under U.S.S.G. 2T1.1, by improperly calculating the tax loss by aggregating the face value of the fraudulent checks and by including penalties and interest in the calculation. The court upheld refusal to consider audit errors and apply available deductions because Black could not establish that he was entitled to any reduction in taxes owed. View "United States v. Black" on Justia Law

Poynter operated an Original Issue Discount (OID) scheme, under which taxpayers falsely list large amounts of OID interest income from municipal bonds and certificates of deposit and corresponding amounts of withholding and claim large tax refunds. Johnson recruited clients and paid Poynter 50 percent of the fee. Her contract included a statement that Poynter’s material was not legal or tax advice. By signing the contract, Johnson agreed that she was not affiliated with the IRS. Clients signed a contract that listed a $20 million penalty for disclosure and certified that the client was not affiliated with any government agency. Johnson completed Kennedy’s 2008 return stating that Kennedy had earned $89,605 in OID income, that $87,492 was withheld, and that Kennedy was entitled to a $61,959 refund. Kennedy was unemployed and received only disability income, none of which was withheld. Kennedy paid Johnson $4117 by deposit into a third party’s bank account. Poynter submitted Gray’s 2007 tax return, listing income of $401,068 and withholding of $401,067. The IRS deposited a $278,874 refund; Gray paid Poynter $15,000. Gray filed additional fraudulent returns for other tax years. After Poynter’s scheme was uncovered, 14 defendants were indicted. Johnson and Gray were each convicted of making a false claim for a tax refund, 18 U.S.C. 287. Johnson was sentenced to 48 months’ imprisonment; Gray to 60 months. The Eighth Circuit affirmed, rejecting challenges to the sufficiency of the evidence; to calculation of the intended amount of loss; and to application of an increase for an offense that involved sophisticated means. View "United States v. Johnson" on Justia Law

Kaplan operated an illegal sports-booking business in New York that moved to Costa Rica in the 1990s. In 2004, the company went public on the London Stock Exchange. Before going public, Kaplan placed $98 million in trusts off the coast of France. Kaplan neglected to pay federal income or capital gains tax for the trusts for 2004 and 2005. In 2006, Kaplan was indicted for operating an illegal online gambling business within the U.S. Kaplan accepted a plea agreement, which stated: [N]othing contained in this document is meant to limit the rights and authority of the United States … to take any civil, civil tax or administrative action against the defendant. The court asked: Do you understand … that there is a difference between a criminal tax proceeding and a civil tax proceeding … that [this] doesn't preclude the initiation of any civil tax proceeding or administrative action against you? Kaplan replied, "I understand." The court sentenced Kaplan to 51 months of imprisonment, and ordered forfeiture of $43,650,000. Later, the IRS issued Kaplan a notice of deficiency with penalties, totaling more than $36,000,000. The Eighth Circuit affirmed: since Kaplan failed to file a return, the period to assess taxes never began to run; the plea agreement was unambiguous; and the government's failure to object to the Presentence Report did not prevent the government from bringing a civil tax proceeding. View "Kaplan v. Comm'r of Internal Revenue" on Justia Law

Between 2007 and 2012, Fountain, an IRS employee, helped orchestrate several schemes that involved filing false tax returns, claiming refunds under the Telephone ExciseTax Refund,the First Time Homebuyer Credit, or the American Opportunity Tax Credit. Fountain employed her knowledge of IRS fraud detection to avoid detection. Fountain and Ishmael enlisted people, including Johnson, to recruit claimants to provide their personal information in exchange for part of a cash refund. A jury convicted Fountain, Ishmael, and Johnson on multiple counts of conspiracy and filing false claims to the IRS, 18 U.S.C. 286, 287. Fountain was also convicted of Hobbs Act extortion and making or presenting false tax returns, 18 U.S.C. 1951(a); 26 U.S.C. 7206. Additionally, Johnson was convicted of filing false claims while on pretrial release. The court sentenced Fountain to 228 months in prison and ordered her to pay $1,740,221 in restitution; sentenced Ishmael to 144 months and $1,750,809 in restitution; and sentenced Johnson to 216 months in prison and to pay $1,248,592 in restitution. Each sentence fell within the Guidelines range after various enhancements were applied. The Third Circuit affirmed. View "United States v. Fountain" on Justia Law

Eagan, Minnesota, assisted in apprehending Procknow, who had absconded while serving supervised release imposed by a Wisconsin state court for forgery. Authorities had received information that Procknow and his girlfriend were staying at an Eagan hotel. The girlfriend was registered at the hotel. Officers spotted Procknow’s car, chased Procknow through the lobby, and arrested him. Through the windows of Procknow’s car, they saw a scanner or copier. Learning of the arrests, the hotel manager stated that the their stay was being terminated and asked the officers to collect a dog, believed to be in their room and ensure that there were no other occupants. Officers knocked, and announced. No one answered, so they used a hotel key and found a dog. Entering to ensure that there were no other occupants, officers saw, in plain view, an electric typewriter, a credit card issued in the name of “Smith,” and financial forms bearing various names and social security numbers. Officer photographed the room, sealed it, and obtained search warrants for the room and car. They seized blank W‐2 forms, partially completed tax forms, lists of business employer identification numbers, and prepaid debit cards (tax refunds) in the names of different people. Further investigation revealed that Procknow had obtained the personal identifying information of at least 40 individuals, which he used to file fraudulent tax returns and claim refunds. Procknow pleaded guilty to theft of government money and aggravated identify theft. The Seventh Circuit affirmed denial of a motion to suppress evidence obtained by the warrantless entry into the hotel room and evidence obtained by grand jury subpoena following the withdrawal of IRS administrative summonses requesting the same information. View "United States v. Procknow" on Justia Law

Curtis, a lawyer, filed 1996-1997 returns reporting tax obligations of $218,983 and $248,236, but made no payments. His partner had taken $600,000 from the practice and declared bankruptcy; Curtis underwent an expensive divorce. Curtis failed to file a return for 1998. Curtis entered into an installment agreement. He filed a return for 2000 but failed to pay $90,000. He entered into a second agreement, but filed returns for 2003 and 2004 reflecting unpaid tax liabilities of $176,802 and $61,000. Curtis did not make estimated payments and stopped making installment payments. He filed returns for 2007, 2008 and 2009, but paid nothing. Curtis was charged with misdemeanor willfully failing to pay taxes owed for 2007, 2008 and 2009, 26 U.S.C. 7203. The court allowed evidence under Rule 404(b), of Curtis’s history of failing to pay his taxes and his withdrawals of money from his law practice for personal expenses. Curtis did not object, but objected to the government’s proposed evidence that he failed to pay payroll taxes for his employees in 2013, arguing that any violations after the charged years did not bear on his state of mind during the time of the charged offenses. Although the court gave Curtis’s proposed instruction on good faith, it declined to modify the pattern instruction to include a requirement for bad motive, with respect to willfulness. The Seventh Circuit affirmed his convictions. View "United States v. Curtis" on Justia Law

Jones owned SAM Packaging and owed several hundred thousand dollars in back taxes for 2006-2008. Jones refused to provide the IRS with bank statements, and later submitted statements, with blacked-out parts. He submitted financial disclosure forms, disclosing accounts at Mutual of Omaha Bank (MO), but not accounts at Community Credit Union. He directed his financial activity to the undisclosed accounts. When the IRS levied on Jones’s MO accounts, they were nearly empty. Jones commingled personal and business accounts, then began dealing in cash. He refused to turn over accounts receivable, stating that he would terminate the business before doing so. In 2010, he declared that SAM had been “suspended” and he was unemployed. He had started a new company to secretly serve his customers. The IRS summonsed customers and learned Jones had performed work without billing them, preventing levy on his accounts receivable. Jones pled guilty to tax evasion, 26 U.S.C. 7201. The district court imposed a two-level enhancement for use of sophisticated means, as recommended in the PSR. After a three-level reduction for acceptance of responsibility, the district court calculated a Guidelines range of 30 to 37 months and sentenced Jones to 24 months. The Eighth Circuit affirmed, rejecting an argument that Jones’s actions were typical of tax evasion offenses and did not make detection more difficult. View "United States v. Jones" on Justia Law

During a traffic stop, police saw evidence of possible identity theft in plain view. A vehicle search revealed mail addressed to people unrelated to Earnest or his passenger, 39 debit cards, $4,000 in cash, and documents containing names, birth dates, Social Security numbers, and addresses for 1,000 individuals, plus their online tax return personal information and debit card account numbers. Hundreds of fraudulent tax returns had been filed, seeking $1.8 million in refunds; the IRS paid out $840,000. Many refunds were loaded onto debit cards. Earnest was linked to residences where the returns were filed and was photographed using the unauthorized debit cards. Tax returns were filed from Earl's IP addresses; he also was recorded using thecards. Both were convicted of conspiracy to commit fraud against the government, conspiracy to use unauthorized access devices, use of unauthorized access devices, and aggravated identity theft. Earnest also was convicted of possessing 15 or more unauthorized access devices. Earl was sentenced to 84 months’ imprisonment. Earnest was sentenced to 172 months. Belizaire recruited people to provide addresses , exchanged identification information of victims, filed fraudulent returns, and used the debit cards; he pleaded guilty to conspiracy to defraud the government and aggravated identity theft and was sentenced to 129 months’ imprisonment. The Eleventh Circuit affirmed both convictions and all sentences. View "United States v. Baldwin" on Justia Law

Miner marketed two schemes that promised to avoid taxes. Miner’s first scheme, IRx Solutions, offered to assist clients in requesting alterations to their Individual Master Files (IMFs), which are internal IRS records pertaining to each taxpayer. Miner claimed that the IRS was engaged in widespread fraud by improperly coding individuals as businesses on their IMFs so that tax could be assessed against them. The second scheme, Blue Ridge Group, helped clients create common-law business trusts, into which he claimed that they could place any or all of their assets in order to avoid paying income tax. Affirming his conviction under 26 U.S.C. 7212(a) for corruptly endeavoring to obstruct the “due administration” of federal income tax laws, the Sixth Circuit rejected arguments that the district court reversibly erred in failing to instruct the jury that section 7212(a) required proof that he was aware of a pending IRS proceeding; that his conduct was constitutionally and statutorily protected; and that certain witness testimony was improperly introduced at trial because the witness opined about his state of mind. View "United States v. Miner" on Justia Law

In 2006, Boyd sent his income and expense information for 2004 to a tax specialist, who prepared a return showing a tax liability of over $27,000. Boyd did not file the return he received from the tax specialist. Instead, Boyd filed his tax returns for 2004, 2005, and 2006 in October 2007, having recently read a book called Cracking the Code, which espoused a theory that federal income tax obligations applied only to individuals who earned income working for the federal government. The three returns declared that in those years he had zero income and zero tax liability. During those three years, Boyd actually had continued the work he had done in prior years and had earned income totaling $795,000. Convicted under 26 U.S.C. 7206(1), Boyd argued that the government had not proven willfulness because it failed to show the absence of a good-faith belief that the he did not have to file returns or pay taxes. The Fifth Circuit affirmed, rejecting challenges to denial of funding for neuropsychologist testimony, admission of uncharged conduct, the prosecutor’s statements, the judge’s statements, the jury instructions, the response to a jury note, and the sufficiency of the evidence. View "United States v. Boyd" on Justia Law