305 371-8101

Taxpayer Placed Funds Offshore and Made Purchases Through a Creditcard

U.S. v. BERRETTINI,  431 Fed. Appx. 114  (3rd Cir. 2011, cert denied, Mar. 5, 2012)

Pharmacy Operator Formed Offshore Corporations to Receive His Earnings and Obtained the Funds Through Credit Cards Issued to Him and “Loans”. The Taxpayer Decided to Represent Himself and Challenged the Jurisdiction of the Court.  The Jurisdiction Argument Was Held to Have No Merit and the Court Found that there was Sufficient Evidence to Affirm the Convictions.

Albert Berrettini was convicted of ten counts of criminal tax offenses, including filing false individual and corporate income tax returns and filing a false treasury form.

In 1994, Albert Berrettini and his wife became involved in the "Tower" scheme, where clients moved money to foreign bank accounts and shell corporations and then repatriated the money using debit cards, "scholarships," and "loans."

As their primary source of income, the Berrettinis owned and operated Bert's Pharmacy. The pharmacy made payments to Matrixx, their shell corporation, under the pretext of consulting and other fees.

Despite a lack of evidence that Matrixx provided any goods or services, Berrettini created false invoices purporting services rendered. The money continued to flow through this elaborate scheme until the Berrettinis would finally "borrow" the money back and make some low-interest payments to one of their own offshore accounts, financing their business and a new home.

From 1996 to 2005, the Berrettinis filed tax returns that failed to report income and claimed false deductions totaling $624,338, resulting in a criminal tax liability of $242,513.

On October 25, 2007, the Berrettinis were charged with eleven counts of tax offenses: conspiracy to defraud the United States by filing false individual income tax returns in violation of 18 U.S.C. 371 (Count 1); filing false individual income tax returns and false corporate tax returns for both a foreign corporation and a United States corporation in violation of 26 U.S.C. 7206(1) (Counts 2-10); and filing a false treasury form in violation of 31 U.S.C. 5314 (Count 11).

Prior to trial, proceeding pro se, Berrettini filed numerous frivolous motions and requests, including a challenge to the District Court's jurisdiction to hear the case.  The District Court ordered a psychiatric examination of Berrettini. The report concluded that Berrettini could understand the nature and consequences of his legal situation and that he could work with counsel.

Despite plenty of time and financial resources, Berrettini did not retain counsel. Thus, the District Court appointed counsel for him and rescheduled his trial, clarifying that Berrettini could replace him with counsel of his own choosing.
In April 2009, the District Court granted Berrettini's request for a continuance to retain counsel, and Berrettini further delayed trial by claiming a physical condition that was later determined to be unfounded. Against the District Court's advice, Berrettini decided to proceed pro se, and the District Court appointed standby counsel. The jury convicted Berrettini and his wife of Counts Two through Eleven. The District Court sentenced Berrettini to 27 months imprisonment to be followed by a term of supervised release of three years, a fine of $7,500, and special assessments of $1,000. Berrettini filed a timely notice of appeal.

Berrettini made a number of challenges, only some of which were legally cognizable. He clearly challenged the District Court's jurisdiction. Berrettini argued that he was not subject to federal jurisdiction. However, Berrettini was charged with federal crimes, and the District Court had subject matter jurisdiction pursuant to 18 U.S.C. 3231. The appellate court had jurisdiction pursuant to 28 U.S.C. 1291.

Berrettini's brief was construed as a challenge to the sufficiency of the evidence. Because standby counsel preserved this issue at trial, the Court exercised plenary review. When reviewing sufficiency of the evidence, the Court asks "'whether there is substantial evidence that, when viewed in the light most favorable to the government, would allow a rational trier of fact to convict.'" (quoting Bornman, 559 F.3d at 152).

The Court does not weigh evidence or determine the credibility of witnesses in making this determination. Citing, United States v. Gambone, 314 F.3d 163, 170 (3d Cir. 2003and United States v. Beckett, 208 F.3d 140, 151 (3d Cir. 2000)). The Court examines the totality of the evidence, both direct and circumstantial and must credit all available inferences in favor of the government.

        In the light most favorable to the government, the evidence indicated that Berrettini filed multiple false tax returns, utilizing a sophisticated international tax evasion scheme. The government presented ample evidence to conclude that Berrettini filed tax returns that were: (1) false as to a material matter; (2) signed under penalties of perjury; (3) not believed to be correct as to every material matter; and (4) with the intent to violate the law. 26 U.S.C. § 7206(1).

In sum, the government presented substantial evidence that supported Berrettini's conviction. The Court affirmed the District Court.

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