U.S. v. Jefferson
                   ( Continued )

cited U.S. v. Apperson 441 F.3d 1162, 1189 (10^th Cir. 2006) in support of their argument.  The defendants also argued that the Government had violated its own rules, specifically, Attorney Manual Section 9-11.120 which states that “the grand jury cannot be used for pre-trial discovery or trial preparation.”

     The Court held that the defendant must show prejudice to dismiss an indictment. Since the defendants did not establish any prejudice the motion was properly denied.  The Court noted that a presumption may arise that the Government is being vindictive if it presents an indictment after a defendant exercises a procedural right or post-trial.  However, the Court refused to impose any presumption when the superseding indictment adds new charges pre-trial. Defendants also moved to severe the tax counts under Rule 8 and  Rule 14.  The Court found that a severance was not needed at that time. There was a relationship between the non-tax matters and the tax counts that made joinder proper.

                   U.S. v. Statin
        2010 U.S. App. Lexis 2763
            (5^th Cir. Feb 10, 2010)

          Karey Statin was the sole proprietor of Quick-Tax in Houston, Texas. 

               U. S. v. Mehta
      2010 U.S. App. Lexis 2501
          (4^th Cir. Feb. 5, 2010)

      Mr. Mehta appealed from his conviction and sentence arising from  16 counts of assisting in the preparation of false tax returns in violation of 26 U.S.C. 7206 as well as 17 counts of wire fraud in violation of 18 U.S.C. 1343.

    Mehta argued that his motion for judgment of acquittal should have been granted and that his motion for a subpoena was wrongfully denied. 

     The Court found that 6 witnesses had testified that they had their tax returns prepared by Mr. Mehta and the deductions on the returns were not provided by the taxpayers.  Two undercover agents posing as taxpayers testified that they had similar experiences.  Mehta used the electronic program to file the false returns.  He also participated in the Refund Anticipation Loan program. As a result, there was sufficient evidence to uphold the jury’s verdict finding Mr. Mehta guilty.

        Mehta also argued that there was an improper variance between the proof at trial and the indictment.  The Court held that convictions generally have been sustained as long as the proof upon which they were based corresponds to an offense that was clearly set out in the indictment.

       The convictions were affirmed. However, Judge Duncan filed a dissent stating that he did not agree with the loss calculation for sentencing.  The sentencing court determined that the average tax loss from the tax returns selected for audit should be extrapolated over the entire universe of tax returns prepared by Mehta.  Judge Duncan pointed out that the reason certain returns were audited was because they contained incorrect tax positions.  However, the returns that were not selected for audit likely did not have the same tax issues.  Judge Shedd wrote a special concurring opinion disagreeing with Judge Duncan.

             U.S. v. Dalton
        2010 U.S. Dt. Lexis 8540
             (S.C. Feb. 2, 2010)

        The 4^th Circuit remanded the case to the district court for resentencing.      

      The district court explained that the criminal history category of VI did not adequately reflect Dalton’s past criminal conduct or his chances of recidivism.  Following the mandate of the 4^th Circuit, the district court departed “incrementally” upward, specifying which arrests and convictions were the basis for the additional points.  The sentence rendered was 105 months.  The same sentence previously rendered.

            U.S. v. Jefferson
         2010 U.S. Dt. Lexis 8131
           (E.D. LA. Jan. 4, 2010)

     The Defendants operated various non-profit and for-profit organizations that received grant money from the State of Louisiana.  They were indicted on June 4, 2008 of various crimes involving fraud.  On May 22, 2009 a superseding indictment was returned adding 34 counts including income tax evasion and conspiracy to commit income tax evasion.

        The defendants moved to dismiss the superseding indictment on the grounds that the superseding indictment did not present charges that were not known at the time the first indictment was returned.  The defendants argued that since the changes were more than mere cosmetic changes the use of the grand jury was improper.  The defendants
                                       ( Continue )  

         Statin appealed the conviction and sentence. Statin argued that each of the taxpayers signed Form 8453. This form created a presumption that the information was accurate. Otherwise any preparer could be charged for filing a return on information supplied by the taxpayer.  While the Court agreed with the argument in principal, it did not agree that the government failed to introduce sufficient evidence to overcome the presumption.  The Court found that rational jurors could have found the elements of the offense beyond a reasonable doubt.  The credibility of witnesses was a matter solely in the province of the jury.

      The Court found that the 51 month sentence was within the  guideline range and the Sentencing Court had sufficiently explained the Section 3553A factors.

                    U.S. v. Suarez
            2010-1 U.S.T.C. P50,215
              (11^th Cir. Feb. 9, 2010)

       Sorga Suarez appealed her conviction for tax evasion (7201) and the 48 month sentence.  Counsel for Suarez alleged that the court erred by giving an inadequate limiting instruction as to the proper use of uncharged conduct.

      The Court permitted the government to introduce letters reflecting that Suarez had run a
                                      ( Continue )

David M. Garvin and Commissioner
Arthur E. Teele, Jr. at trial. 

                 U.S. v. Suarez 
                   ( Continued ) 

school and submitted false student financial aid applications.

      The Court instructed the jury that the letters were not proof of any other wrong doing but, were introduced solely to prove the indicted offenses.

       Suarez argued that this instruction improperly permitted the jury to convict her solely on the letters.  The Court found that Suarez had failed to establish that her substantive rights had been effected.  The conviction and sentence were affirmed.

                U.S. v. Stenlin
        2010-1 U.S.T.C. P50,212
          (N.D. TX Feb. 5, 2010)
          
       The United States sought a default judgment and permanent injunction against the defendant doing business as Nick’s Taxes.  Approximately 242 fraudulent tax returns had been filed leading to erroneous refunds of over $800,000.  The court noted that a lifetime ban is generally limited to instances where the preparers conduct qualified as extreme or egregious misconduct. Citing, U.S. v. Gleason, 432 F.3d 678, 683 (6^th Cir. 2005), U.S. v. Wordbrock, 38 F.3d 440, 447 (9^th Cir. 1994) and U.S. v. Bailey, 789 F. Supp. 788, 818 (N.D. Tex. 1992).         The Court granted the default.  However, the court stated “a lifetime

    He was indicted on fifteen counts of 26 U.S.C. Section 7206(2).  Statin moved pursuant to Rule 29 for  judgment of acquittal.  The motion was denied and the jury found Mr. Statin guilty on all counts.

       Counts one through eight charged Statin with including false income claims on Schedule C. These taxpayers appeared to have earned more than they, in reality, had earned.  Counts nine through fifteen overstated Scedule A deductions.  Statin was sentenced to 36 months on counts 1 through 8.  However, he was sentenced to 15 months on counts 9 through  15.  The sentence on counts 1 through 8 ran concurrently. The sentence for counts 9 through 15 ran concurrently but, the two groups ran consecutively.

ban is a draconian remedy and should not be undertaken lightly.” The Court entered an injunction for a period of 15 years.

            U. S. v. Benacquista
       2009 U.S. Dt. Lexis 124871
         (W.D. N.Y. Dec. 3, 2009)

       Defendant sought to suppress evidence obtained through the execution of two search warrants. Alternatively, Defendant requested a Franks hearing. See, Franks v. Delaware, 438 U.S. 154 (1978).  The defendants were charged with 26 U.S.C. 7206 violations. The Government argued that the defendants failed to show that the revenue agent intentionally or recklessly misled the Court.  Suppression may be granted if a defendant shows that the affidavit was inaccurate as a result of deliberate falsehoods or reckless disregard for the truth and

those facts were necessary for the judge to find probable cause sufficient to issue the search warrant.

      The Court determined that the errors in the agent’s affidavit were not material to the Magistrate Judge’s probable cause determination.

                U.S. v. Salisbury
         2010-1 U.S.T.C. P50,224
           (6^th Cir. Feb. 16, 2010)

    Salisbury made large profits fraudulently selling guns owned by a private museum.  He was charged with wire fraud, money laundering, and conspiracy.  He was also charged with four counts of evasion for his willful failure to pay taxes on his profits. The jury found him not guilty of all charges except two lesser included offenses pursuant to 26 U.S.C. Section 7203.

    Salisbury appealed the conviction and sentence.  He argued that the Court improperly limited the testimony of his expert.  Salisbury wanted his expert to testify as to Salisbury’s willfulness.

     The Court found that Rule 704(b) prohibits experts from testifying as to the “ultimate issue”.  Salisbury’s willfulness was the ultimate issue for the trier of fact.  Salisbury should have argued below that the expert would express his opinion whether Salisbury understood certain accounting and tax principals.
                                       ( Continue ) 

                  U.S. v. Salisbury
                    ( Continued )          
This was not done until the appeal was filed.  Salisbury also argued that the agents testified as to the ultimate issue.  The Court found that the defense invited the answers or failed to properly object.

      Salisbury also challenged his sentence. Salisbury noted that the guidelines treated misdemeanor tax offenses the same as felony tax offenses.   The Court found that the sentence was appropriate in view of the tax loss that exceeded $1,000,000.

                 In the matter
           of the extradition of
         Massimiliano Lanzani
     2010 U.S. Dt. Lexis 14044
       (C.D. Cal. Feb. 18, 2010)

     Spain sought to extradite Mr. Lanzani for tax fraud.  The request was made under 18 U.S.C. Section 3184.  Spain has a value added tax system.

       The Court found that Spain had to establish probable cause that the defendant had violated the law.  The documents presented by Spain failed to establish probable cause. As a result, Spain’s request was denied without prejudice.

                   U.S. v. Donna
         2010 U.S. App. Lexis 3789
            (3^rd Cir. Feb. 24, 2010)

      Mr. and Mrs. Donna were

  

convicted of  conspiracy to commit extortion and filing false returns in violation of section 7206.

       The Donnas appealed on several grounds including insufficiency of the evidence.  The Court stated that it would not reverse a criminal conviction by reason of insufficiency of the evidence unless the evidence viewed in the light most supportive of the fact finder’s decision cannot support the verdict.  The Court found the evidence sufficient to confirm the convictions.

      The Donnas appealed the denial of their motion to severe the tax counts from the extortion counts.  The Court noted that even in cases where joinder is technically proper under Rule 8 a defendant may move for severance under Rule 14 to prevent prejudice. However, the Court stated that it will not reverse a conviction by reason of

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: DavidMGarvin.com

misjoinder of offenses unless the misjoinder had a substantial effect on the outcome of the proceedings.  The Court found the effect on Donnas’ trial was not substantial. The convictions and sentences were upheld.  

                U.S. v. Chappell
       2010 U.S. Dt. Lexis 16474
         (M.D. AL. Feb. 24, 2010)

     Mr. Chappell was charged with 21 counts of assisting in the preparation of false tax returns under 7206.  Mr. Chappell was released on bond. Mr. Chappell sought review because the special conditions of the bond prohibited Mr. Chappell from continuing to prepare and file tax returns.

      The Court framed the issue as whether the bond reasonably assured the safety of the public. The Court found that the issue is broader than the risk of physical violence.

      The Court found that  Mr. Chappell could be properly barred from preparing tax returns but, could not be barred from all tax related services such as audit representation since there was no evidence that Mr. Chappell had violated any law in that area.  

                U.S. v. Hatfield
        2010 U.S. Dt. Lexis 15210
         (E.D. N.Y. Jan. 22, 2010)

      In an insider trading case, the Court found that defendants’ alleged false statements to NASDAQ was not inextricably
                                       ( Continue )

                 U.S. v. Hatfield
                    ( Continued )

intertwined with defendants’ alleged false statements to other government entities as to permit such evidence to be introduced at trial.  However, the Court did permit the introduction into evidence proof that the Defendant failed to pay taxes on the profits made allegedly from insider trading.  The court agreed that this information was inextricably intertwined with the indictments non-tax charges.

               U.S. v. Beliveau
       2010 U.S. Dt. Lexis 15981
       (Dist. Minn. Jan. 22, 2010)

       Mr. Beliveau was charged with conspiracy under 371, mail fraud under 1341, and willful failure to pay over tax under 26 U.S.C. 7202.

      The defendant moved to suppress the fruit of an alleged unlawful arrest and search and seizure by the agent who was investigating the failure to remit employment taxes.

       Counsel for defendant argues that records produced pursuant to civil summons and statements taken as part of that process should be suppressed because the defendant did not have a lawyer and his right to counsel under the 6^th amendment had been violated. 

      The Court found that the right to counsel does not attach until adversary judicial criminal proceedings have been commenced by way of a formal charge, preliminary hearing, information, or arraignment. As a result, the motion was denied. However, the Court granted the defendant’s motion to severe the tax counts from the fraud counts pursuant to Rule 8.

     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 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.

Brazilian race driver Helio Castroneves, right, accompanied by his sister, Katiucia Castroneves, center, and Attorney David Garvin, arrive at Federal Court in Miami, Monday, March 2, 2009.

     D. Armadoros and Attorney       David M. Garvin on the anniversary
of his trial.

Information on the author