Archive | tax evasion

Friday, October 14th, 2016

Second Circuit rejects Sixth Circuit’s Interpretation of 26 U.S. C. § 7212(a)’s “Omnibus Clause”

The Second Circuit decided the case of United States v. Marinello (Docket No. 15-2224) on Friday. You can see the 44-page decision here.  The case involved small businessman, Carlo Marinello, who did not keep corporate records or file personal or corporate income tax returns for nearly two decades. Marinello was convicted by a jury in 2014 in the Western District of New York on nine counts of tax-related offenses. In his appeal, he raised three grounds. I’ll review two of them here.  First, he challenged his conviction under the “omnibus clause” of 18 U.S.C. § 7212(a), which imposes criminal liability on one who “in any other way corruptly . . . obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title.” In making his argument, Marinello relied on the Sixth Circuit case, United States v. Kassouf, 144 F.3d 952 (6th Cir. 1998), which …


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Categories: knowledge, overbreadth, statutory construction, statutory interpretation, tax evasion

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Wednesday, September 21st, 2016

Tax Attorney’s Conviction Affirmed

The single opinion the Circuit issued today is United States v. Daugerdas, No. 14-2437-cr  (Circuit Judges: Kearse, Walker, and Cabranes).

The defendant was a Certified Public Accountant and tax attorney. He and others designed tax shelters (for wealthy clients) in which the transactions underlying the shelters focused on the transactions tax consequences, not on their profitability. And the tax shelters “generally did not generate meaningful returns.” The defendant was convicted by a jury of seven counts related to the tax shelters (i.e., 1 count of conspiracy to defraud the IRS [§371] ; 4 counts of client tax evasion [26 U.S.C. § 7201]; 1 count of IRS obstruction [id. 7212(a)]; and 1 count of mail fraud [18 U.S.C. § 1341] ).

Interesting though, the jury acquitted Mr. Daugerdas of the 3 counts that charged him with personal tax evasion based on his use of  the tax shelters …

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Categories: fraud, hearsay, tax evasion

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Categories: fraud, hearsay, tax evasion

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Sunday, June 3rd, 2012

Fleeced Hampton

United States v. Litwok, No. 10-1985-cr (2d Cir. April 30, 2012) (Livingson, Lohier, CJJ, Koeltl, DJ)

An Eastern District jury convicted defendant Evelyn Litwok of one count of mail fraud, and three counts of tax evasion – for the years 1995, 1996 and 1997. The circuit found the evidence legally insufficient to support the conviction for the 1996 and 1997 tax evasions, and also found that the mail fraud and the 1995 tax evasion counts were improperly joined. The court remanded for a new trial on those counts.

Background

Litwok seems to have spent a good part of the mid-1990’s involved in financial shenanigans in and around East Hampton. The mail fraud conviction arose from her involvement in a scheme to defraud an insurance company by making false claims for property damage and related losses at her two East Hampton homes. The tax evasion charges arose from private equity …


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Categories: misjoinder, sufficiency, tax evasion, Uncategorized

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Wednesday, April 29th, 2009

Straddle Sore

United States v. Josephberg, No. 07-3958-cr (2d Cir. April 9, 2009) (Kearse, Sack, Katzmann, CJJ)

Background – Multiple Acts of Tax Fraud and Evasion

A “straddle” is a type of tax shelter transaction involving the simultaneous ownership of a contract to buy a commodity for delivery in a future month and a contract to sell the same amount of the same commodity in a different future month. Either the purchase or sale contracts can be sold at a loss. Josephberg’s company sold interests in limited partnerships that invested in such straddle transactions. The partnership owned both contracts to buy and contracts to sell, and each year it would sell the type of contract that had decreased in value, to realize the losses. Individual partners would claim their shares of the losses as deductions on their tax returns for that year, and the partnership would defer the sale of the offsetting …


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Categories: tax evasion, Uncategorized

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Wednesday, May 28th, 2008

Deficiency Expert

United States v. Ellett, No. 07-3682-cr (2d Cir. May 23, 2008) (per curiam)

James Ellett was a tax protester, who stopped paying his federal income tax after reading a book called “Vultures in Eagle’s Clothing,” which purported to describe a lawful way of avoiding taxes. He claimed to have read the book more than 100 times, and spent additional hours studying the subject in a law library. Between 2000 and 2004, Ellett failed to pay more than $64,000 in federal income tax based on his belief that, as a “citizen” of New York State who worked for a private employer, he was not subject to taxation.

At trial, his defense was a lack of willfulness, which the jury rejected. On appeal, he argued that due process required that he be given an opportunity to litigate his position within the tax system before being prosecuted for tax evasion. Under this theory, …


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Categories: due process, tax evasion, Uncategorized

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