Justia White Collar Crime Opinion Summaries

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

In opening and closing arguments during his trial on three counts of tax evasion for failing to pay almost $239,400 in income tax between 2005 and 2007, 26 U.S.C. 7201, Stuart’s attorney argued that he believed he owed no taxes. Stuart thought that the United States had no authority to tax income. Stuart had adopted these views after reading a book called “Cracking the Code,” which urges people to resist paying income taxes, but his counsel told the jury that Stuart learned his ideas from his fellow church patrons. Counsel described Stuart as a curious, determined, and “kooky, not criminal” person. Only after he received no response to his inquiries from the IRS, the Secretary of the Treasury, or his accountants about his tax ideas, counsel stated, did Stuart begin to refrain from paying income tax. His attorney did not call any witnesses; Stuart did not testify and the jury found him guilty. The Seventh Circuit affirmed, rejecting an argument of ineffective assistance of counsel. View "United States v. Stuart" on Justia Law

Elsass and his companies, FRG, and STS, were charged with violations of the Tax Code, including claiming theft-loss deductions for losses that did not involve criminal conduct, claiming those deductions before it was clear that there was no reasonable prospect of recovery, falsely characterizing theft losses as losses incurred in a trade or business to artificially inflate refunds, claiming theft-loss deductions to which taxpayers were not entitled because the losses were incurred by deceased relatives, negotiating customers’ tax-refund checks and depositing them into defendants’ bank accounts, falsely indicating that Elsass was an attorney in good standing, making deceptive statements to customers that substantially interfered with the administration of the tax laws, promoting an abusive tax shelter through false or fraudulent statements about the tax benefits of participation, and aiding and abetting the understatement of tax liability. The district court held that there was no genuine issue as to whether Elsass and FRG had engaged in each of these prohibited practices and enjoined them from serving as tax-return preparers. While it granted summary judgment to STS with respect to all claims except on, because STS is wholly owned by Elsass, it enjoined STS to the same extent as Elsass and FRG. The Sixth Circuit affirmed. View "United State v. Elsass" on Justia Law

In 2001, Mirando pleaded guilty to mail fraud, money laundering, and tax evasion relating to the 1995 and 1996 tax years. Following his 2003 release from prison, the IRS assessed additional tax, interest, and penalties for the 1995 and 1996 tax years and for unpaid tax liabilities for 2000 and 2004. In 2007, Mirando was indicted for conspiracy to defraud the United States and four counts of tax evasion, one for each of the 1995, 1996, 2000, and 2004 tax years. He again pleaded guilty. The parties stipulated that as of June 2007, the total tax liability, including interest and penalties, amounted was $448,776.13. Mirando made payments to the IRS before entering his plea, totaling $467,686.04, inexplicably paying $18,909.91 more than the agreed amount. He was sentenced to 50 months’ imprisonment. In 2008, Mirando and his ex-wife filed amended returns, claiming refunds for the taxable years 1995, 1996, and 2000 in the amounts of $38,871, $54,112, and $32,332, respectively. The IRS denied the claims. Mirando filed a tax refund suit. The IRS argued that judicial estoppel barred Mirando from challenging the amount; Mirando argued that the government waived its estoppel argument because it failed to assert it as an affirmative defense. The Sixth Circuit affirmed the district court’s entry of summary judgment in favor of the IRS.View "Mirando v. U.S. Dep't of Treasury" on Justia Law

In 2009 Betty and Wayne submitted a tax return on behalf of a Betty Phillips Trust, signed by Betty, who was listed as the trustee, claiming income of $47,997. A second return on behalf of a Wayne Phillips trust, was signed by Wayne, but Betty was listed as trustee. This return reported income of $1,057,585. Both returns claimed that all income had gone to pay fiduciary fees, so that the trusts had no taxable income. The Wayne Trust claimed a refund of $352,528. The Betty Trust claimed $15,999. The IRS issued a check for $352,528. They endorsed the check and deposited it into a joint account. The returns were fraudulent. The IRS had no record of any taxes being paid by the trusts. In December, the IRS served summonses. That month, the couple withdrew $244,137 remaining from their refund proceeds using 13 different locations. They followed the same strategy the next year, but did not receive checks. A jury convicted Betty of conspiracy to defraud the government with respect to claims (18 U.S.C. 286), and of knowingly making a false claim to the government (18 U.S.C. 287.1). The district court sentenced her to 41 months’ imprisonment and ordered them to pay $352,528 in restitution. The Seventh Circuit affirmed, rejecting claims that the court improperly admitted evidence, and that the government constructively amended the indictment and violated Betty’s right against self‐incrimination.View "United States v. Phillips" on Justia Law

Illinois legalized riverboat casino gambling in 1990. Since then, the state’s once‐thriving horseracing industry has declined. In 2006 and 2008, former Governor Blagojevich signed into law two bills that imposed a tax on in‐state casinos of 3% of their revenue and placed the funds into a trust for the benefit of the horseracing industry. Casinos filed suit under the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1964, alleging that defendants, members of the horseracing industry, bribed the governor. On remand, the district court granted summary judgment for the racetracks, finding sufficient evidence from which a reasonable jury could find that there was a pattern of racketeering activity; that a jury could find the existence of an enterprise‐in‐fact, consisting of Blagojevich, his associates, and others; sufficient evidence that the defendants bribed Blagojevich to secure his signature on the 2008 Act; but that the casinos could not show that the alleged bribes proximately caused their injury. The Seventh Circuit reversed in part. Viewing the evidence in the light most favorable to the plaintiffs, there was enough to survive summary judgment on the claim that the governor agreed to sign the Act in exchange for a bribe. View "Empress Casino Joliet Corp. v. Johnston" on Justia Law

George Schussel’s former company fraudulently transferred millions of dollars to him in order to avoid paying income taxes. The IRS, which is authorized by statute to collect a person’s tax debt by reclaiming assets the debtor has transferred to someone else, claimed that Schussel was liable as a transferee for the company’s tax deficiencies. The United States Tax Court held Schussel liable for the company’s back taxes of over $4.9 million plus interest of at least $8.7 million. Schussel appealed, disputing the amount he owed the IRS as a result of the fraudulent transfers. The First Circuit reversed in part and affirmed in part, holding (1) the tax court erred in calculating prejudgment interest on the fraudulently transferred funds under the federal tax interest statute rather than assessing the prejudgment interest at the Massachusetts rate; (2) the tax court did not err in accepting as a proper measure of the assets Schussel received the actual amount transferred from the company into Schussel-controlled accounts; and (3) Schussel’s loans to the company to pay Schussel’s litigation expenses did not reduce the net amount transferred to him. View "Schussel v. Werfel" on Justia Law