U.S. v. St. Pierre      2010 U.S. App. Lexis 5513        (1st Cir. Mar. 17, 2010)      Taxpayer appealed two evidentiary rulings by the District Court during her trial in which she was convicted of tax evasion under 7201 and obstruction of the administration of the Internal Revenue Laws under 7212.      The court found that the trial court correctly sustained the government’s objection to the taxpayer’s expert offering an opinion as to the standard of care owed to the taxpayer by her accountants.       The taxpayer had diverted corporate funds for personal items and had used personal accounts to make expenditures that were allegedly not disclosed to her accountants.  The court found that the proposed accounting standards evidence would have confused the jury because their failure to discover and/or prevent the fraud was not a valid defense.      The district court did not unduly limit the proposed cross examination of the IRS agent since it would have done little to establish prejudice. Under 403 the court was justified to exclude what would have been a waste of time.      The convictions were affirmed. Taxpayer’s Sixth Amendment right to present a defense and to confront witnesses against her is not unlimited.           Lee v. Paquin (Warden)         2010 U.S. Dt. Lexis 25457       (W.D. Wisc. Mar. 18, 2010)      Taxpayer filed a petition for a writ of habeas corpus under 28 U.S.C. 2254. Taxpayer was convicted of 10 counts of forgery  and 3 counts of filing false returns.

David M. Garvin, Esq.     Taxpayer argued three grounds.  First, the court did not permit the introduction of a business plan because it was not produced until the last day of trial. Second, his attorney was ineffective because he failed to object to the agent testifying that the taxpayer had fraudulent intent. This was the ultimate issue to be decided by the jury. Third, taxpayer’s due process rights were adversely effected from the cumulative effect of the two matters.      The court found that the taxpayer was not entitled to ambush the government by withholding exhibits. The court further found that the defense attorney should have objected to the agent giving his opinion as to the taxpayer’s intent. However, the court found that the jury instructions diffused the problem by telling the jury that it did not have to accept the expert’s opinion.  The petition was denied.                U.S. v. Eastwood      2010 U.S. Dt. Lexis 23339       (E.D. Tenn. Jan. 7, 2010)      Ms. Eastwood filed motions to dismiss charges that she conspired to attempt to evade taxes of Mr. Eastwood and attempted to evade the taxes of Mr. Eastwood.  She asserted that the indictment failed to allege that she had a legal duty pay the tax obligation of someone else.

Mr. Eastwood moved to dismiss the indictment based upon the statute of limitations under 26 U.S.C. 3281.      The court denied Ms. Eastwood’s motion and held her obligation to pay the tax was irrelevant. Further, the court held that 26 U.S.C. 6531 establishes a six year statute of limitations commencing from the last overt act of the conspiracy or the last affirmative of act of evasion. Since the indictment alleged affirmative acts up to the date of the indictment the motion to dismiss based upon the statute of limitations was denied.                  U.S. v. Street      2010 U.S. App. Lexis 5164         (3rd Cir. Mar. 11, 2010)      Taxpayer appealed his conviction for three counts of failing to file income tax returns  under 7203.  Taxpayer had been indicted for mail fraud, wire fraud, assisting in filing false returns and failing to file his own returns. He was acquitted on all counts except the 3 counts of willfully failing to file his own return for three years.      Taxpayer raised four arguments on appeal. There was insufficient evidence, the indictment was constructively amended, the court prevent his presentation of his defense, and ineffective assistance of counsel.      The court found that it will sustain the verdict if, viewing the evidence in the light most favorable to the Government, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.            The taxpayer argued that the Government’s evidence went to the issue as to whether he filed a return.     The taxpayer argued that the issue should be whether he failed to “make” a return.  However, the court found this language to mean the same thing.                                                       (Continue)

From the desk of David M. Garvin, Esq.

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U.S. v. Street                      (Continued)      An indictment is constructively amended when evidence, arguments, or the court’s jury instructions effectively broaden the indictment to create an additional basis for conviction. However, since the court found that “filing” and “making” a return was the same thing there was no broadening.      The trial court had quashed two subpoenas issued by taxpayer to two high government officials.  The court found that the taxpayer was permitted to present his theory and there was no showing that the testimony of the two government witnesses would have helped the taxpayer.                                                 Finally, the court held that it does not entertain ineffective assistance of counsel claims on direct appeal.                 U.S. v. Miller       2010 U.S. App. Lexis 4883          (5th Cir. Mar. 8, 2010)      Taxpayer pled guilty to one count of money laundering and one count of tax evasion. He was sentenced to concurrent sentences of 96 months and 60 months. Taxpayer was ordered to pay restitution in the amount of $1,485,074.  After his appeal failed, taxpayer filed a petition for a writ of audita querela seeking to have his restitution reduced.       The writ of audita querela is a common law writ dating back to the reign of Edward III.  The gist of the writ is that a defense has arisen that could not have been presented.       The writ is directed against the enforcement of the judgment. A writ of coram nobis  attacks the judgment itself.      The Supreme Court’s ruling in U.S. v. Morgan, 346 U.S. 502 (1954) stated that for criminal judgments such writs in some circumstances may still be available.

The court determined that the relief sought was not justified since the restitution order correctly reflected what the taxpayer had embezzled.              U.S. v. McCarthy       2010 U.S. Dt. Lexis 21731      (Dist. Minn. Mar. 9, 2010)      Taxpayer was accused of running a business to help clients cheat on their taxes. The jury convicted taxpayer and others of conspiracy under 371. He was also convicted of 2 counts of 7206(2) for preparing false returns.      Taxpayer objected to the tax loss.  The government alleged three schemes. A trust scheme, claim of right scheme, and a LLC scheme.  The total loss from the three schemes was alleged to have been $3,282,482.      McCarthy objected and argued that the loss was less than one million dollars.  The trial court ultimately found that the loss for sentencing purposes was between one million and two and a half million dollars.               U.S. v. Franklin       2010 U.S. App. Lexis 6545         (10th Cir. Mar. 30, 2010)      Franklin sought a certificate of

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appealability from the district court’s denial of his 28 U.S.C. 2255 motion.           Franklin was convicted of two counts of aiding in the preparation or filing of a false return in violation of 7206(2).  The district court found his claims were inherently incredible. The granting of a COA is a jurisdictional prerequisite to an appeal from the denial of a 2255 motion.      Franklin failed to make a substantial showing of the denial of a constitutional right. There must be a showing that reasonable jurists could debate whether the petition should have been resolved in a different manner. The 10th Circuit Court of Appeals ruled that Franklin failed to carry his burden and denied the motion.               Okonkwo v. United States       2010 U.S. Dist. Lexis 29656       (M. Dist. AL. Mar. 5, 2010)      Okonkwo was found guilty of one count of conspiracy to defraud the United States pursuant to section 371 and eleven counts of aiding in the preparation of false income tax returns pursuant to 7206(2).        Okonkwo appealed alleging insufficient evidence. The court found that there was sufficient evidence to support the verdict.        Okonkwo then filed a 2255 motion based upon ineffective assistance of counsel.       He claimed that his counsel failed to conduct an adequate pretrial investigation, failed to effectively impeach adversary witnesses, adequately advise him concerning plea offers and present a statute of limitations defense.           To succeed in a claim of ineffective assistance of counsel a petitioner must meet two prongs. First, the petitioner                              (Continue)

Okonkwo v. United States                      (Continued) must establish that counsel performed outside of the wide range of reasonable professional assistance and made errors so serious that he failed to function as the kind of counsel the guaranteed by the Sixth Amendment. Second, the petitioner must establish prejudice.      The Court found that Okonkwo failed to meet the two prongs.                   U.S. v. Wolff       2010 U.S. App. Lexis 5980        (10th Cir. Mar. 23, 2010)      Wolfe was convicted of three counts of violating 876 and two counts of interfering with the administration of the Internal Revenue laws pursuant to section 7212. Wolfe admitted that he refused to pay taxes since 1988.  When the government tried to foreclose its lien Wolfe wrote letters threatening that he found defend his property. His possession of weapons was found to be admissible evidence that he could carry out his threats.       The court found that there was sufficient evidence to support the jury’s verdict.                 U.S. v. Aguirre                     2010 U.S. App. Lexis 5876         (11th Cir. Mar. 18, 2010)           Aguirre was convicted of tax evasion pursuant to 7201. Aguirre appealed because the district court did not grant his motion to exclude evidence obtained by the IRS who exceeded the scope of a warrant.     In addition he was prohibited from introducing evidence that the accountant that forged returns of third parti

No witness testified that the accountant had been relied upon by Aguirre. The court found that Aguirre was not prevented from present his defense and his appeal was denied.                U.S. v. Dehlinger         2010 U.S. App. Lexis 4730           (4th Cir. Mar. 5, 2010)      Dehlinger was convicted of tax fraud. He appealed arguing ineffective assistance of counsel and that a mistrial should have been declared when a witness volunteered evidence previously ruled inadmissible. Dehlinger also argued that an IRS agent gave a lay opinion in violation of Rule 701.      An appellate court considers ineffective assistance claims on direct appeal only if it conclusively appears from the record that defense counsel did not provide effective representation. A district court’s refusal to grant a mistrial is reviewed for abuse of discretion. An abuse of discretion is found only under the most extraordinary of circumstances and requires that the defendant show prejudice.      A district court can prevent prejudice with a limiting instruction particularly if the danger of prejudice is slight in view of the overwhelming evidence of guilt.

Information on the author               David M. Garvin is an attorney who’s practice concentrates in the area of white collar crime defense. Mr. Garvin was admitted to the Florida Bar in 1982. He holds a Juris Doctor Degree from the University of Miami (1982) and a LLM in Taxation from the University of Miami (1987). Mr. Garvin is certified by the Florida Bar as a Tax Specialist (1990). Mr. Garvin is also a licensed Certified Public Accountant in Florida since 1982. Mr. Garvin is admitted to practice before the United States Supreme Court, the Eleventh Circuit Court of Appeals, the Eight Circuit Court of Appeals, the Sixth Circuit Court of Appeals, the United States District Courts for the Southern, Middle and Northern Districts of .

U.S. v. Kernell       2010 U.S. Dist. Lexis 36477        (E.D. Tenn. Mar. 17, 2010)          Defendant was represent ed by Wade V. Davies, Esq. Of Knoxville, Tenn. Mr. Kernell through counsel argued that the indictment failed to allege facts that constituted wire fraud.      The defendant was charged in a four count Superseding Indictment with alleged unauthorized access of Governor Sarah Palin’s Yahoo e-mail account in September 2008.  Count two alleged wire fraud.  Kernell argued that the data and pictures he had access to do not constitute “property”. He was also charged with unauthorized access  and anticipatory obstruction of justice.      The deprivation of the victim’s right to the exclusive use of the information was found to be “property” sufficient to support the charge of wire fraud. However, the Court noted that obtaining property was more than merely glancing at some data.

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The Tax Fraud Case Report is a newsletter reflecting the latest tax fraud cases. The content is not legal advice and should not be relied upon. Taxpayers and their professionals are encouraged to contact a Florida Bar Certified Tax Specialist with criminal trial experience before making any decision concerning a matter with the IRS that may become criminal in nature. For more information contact:       David M. Garvin, Esq.       200 S. Biscayne Blvd.                Suite 3150           Miami, FL. 33131          Tel: (305) 371-8101          E-mail: ontrial2@aol.com     Web: www.DavidMGarvin.com

From the desk of David M. Garvin, Esq.

From the desk of David M. Garvin, Esq.

From the desk of David M. Garvin, Esq.

David M. Garvin, Katiucia  and      Helio Castroneves during  trial  in 2009 Florida, the Florida Supreme Court, and the United States Tax Court.      Mr. Garvin’s Martindale-Hubbel rating is “AV”. He is listed in the Pre-Eminent Bar Register as a criminal attorney and as a tax attorney. He is also listed in Super Lawyers.