Sentencing - Plea Bargaining and the Right to Trial (9/25/11)

As tax crimes practitioners know, the vast majority of tax crimes indictments end in a plea agreement. This is true of federal crimes generally. The plea agreement the prosecutor offers usually materially raises the risks of going to trial as opposed copping a plea. We also know that the inducements can include the obvious -- acceptance of responsibility 2 or 3 level downward adjustment to the Guidelines offense level calculation and, where appropriate, a 5K1 departure for substantial cooperation. But the plea equation can also be manipulated in other ways probably not intended by the Guidelines. This means that the prosecutors can make the plea deal so sweet that, in many cases, a defendant cannot take the risks of exercising his or her Sixth Amendment right to go to trial.  At one level, that is the nature of the plea agreement; at another level, it can be corrosive to the system as we imagine it.

In a very thoughtful opinion in United States v. Ring, ___ S. Supp. 2d ___, 2011 U.S. Dist. LEXIS 106217 (D DC 2011), here (and with appendix here), Judge Segal Huvelle of the DC District Court addresses these manipulations of the Guidelines sentences to discourage the exercise of the Sixth Amendment right to trial. Ring was one of the lobbyists caught up in the Abramoff affair. Several, including Ring, were affiliated with the Greenberg Traurig law firm. There were others, including a congressman.  Ring was the only one of the targets to go to trial -- the others found the plea deal the prosecutors offered to be just to good to go to trial. As a result of going to trial (and perhaps in some form of perverse punishment for going to trial), the prosecutors sought to managing the sentencing to make the punishment harsh indeed compared to those who pled. I won't go into all the detail of how the prosecutors sought to mete out extra punishment through the Guidelines calculations for Ring. I cite below several articles that flesh this out. Suffice it to say, Judge Huvelle navigated the Guidelines to take away the sting the prosecutors sought to impose.  As a predicate to doing so, Judge Huvelle has a very thoughtful discussion of just how corrosive the process can be.  For that reason, I strongly recommend that the reader interested in this subject, read the opinion.
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Reliance on Attorney Good Faith Rejected as Defense to Guilt May Mitigate the Sentence (8/22/11)

In United States v. Renner, ___ F.3d ___, 2011 U.S. App. LEXIS 16331 (8th Cir. 2011), here, the defendant asserted a Cheek type good faith defense. The argument was that the defendant had relied upon his tax attorney. The tax attorney gave favorable testimony, but the jury did not accept the good faith defense. The tax attorney renewed his favorable testimony, by letter, for sentencing. The district judge apparently good faith related to the attorney consulation for sentencing.

The facts, highly summarized, were as follows: The taxpayer operated a business through a single-member LLC which was disregarded and treated as a Schedule C entity. The business he ran was to provide something like a debit card service for certain types of purchases. The business was not a bank and did not require that he do anything with his clients' cash deposits other than have a general obligation to apply them when the clients drew them. In other words, he could deposit them into the general business account and, herein lies the rub, use them in the interim as he saw fit. He did see fit and used them for various nonbusiness purposes (living expenses, etc.) The defendant was indicted for tax evasion for initially not filing and then filing delinquent returns omitted the income that he lived on from the customers' cash.
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Tax Obstruction Crimes -- Section 7212 and Klein Conspiracy (5/26/11)

Today, I pick up a thought I threw out in a comment in my blog entry titled "Jury speaks in the Daugerdas Case -- Guilty! (5/24/11)" regarding the overlapping tax obstruction under Section 7212 and the Klein conspiracy crimes and convictions. Here are Judge Pauley's instructions on these crimes in Daugerdas. I present the tax obstruction charge first, although it was presented second in the charge to the jury:

Tax Obstruction Charge (Section 7212)

Counts 20 and 21: Corruptly Endeavoring to Obstruct and Impede the Functions of the IRS

Count 20 of the Indictment charges that, from in or about 1994 to in or about October 2005, defendants Guerin, Field, Brubaker, and Parse corruptly obstructed and impeded, and endeavored to obstruct and impede, the due administration of the Internal Revenue Laws.

Count 21 charges that, from in or about 1994 to in or about October 2005, defendant Daugerdas corruptly obstructed and impeded, and endeavored to obstruct and impede, the due administration of the Internal Revenue Laws.

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Sentencing Simon (Preliminary and Final)

Note to Readers:  This blog initially discussed only the opinion on Preliminary Sentencing Findings.  I have since obtained the subsequent sentencing opinion.  I accordingly ad a link to the sentencing opinion and a short discussion of it at the end of this blog.

PRELIMINARY SENTENCING OPINION 3/14/11

Only 3 defendants have been tried recently amidst the Government's juggernaut against foreign bank accounts. All were convicted. I have previously discussed here, 2 of those defendants, father and son, who were convicted and sentenced to 40 months each. I want to talk today about the other whose prosecution, technically, did not arise from that juggernaut, but who was tried for foreign bank account violations during the ongoing juggernaut. He is James A. Simon whom I have discussed before here.

Mr. Simons' prosecution apparently arose from an investigated that predated the UBS brouhaha from whence the flurry of criminal charges arose. He had a number of criminal issues beyond just failing to report and pay tax on income stashed in foreign banks and filing the required FBAR. He did not plead and was convicted of multiple counts as will be noted.
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Another Sentence To Consider When Thinking of Sentencing Disparities

DOJ Tax CES touts this sentence on its web site here. The read on the site is short, so I encourage readers to look at it. Here's the guts of it though:

1. Plea to mortgage fraud (5 year count) with "total bank fraud loss, which included relevant conduct stemming from additional frauds that Shaffer perpetrated upon other banks, was $2,688,571.93."

2. Plea to tax evasion count (5 year count) with total tax loss (including relevant conduct for nonplea years, $536,228.77.

3. Plea to failure to collect, account for and pay over employment taxes (5 year count) with total tax loss, including relevant conduct, $272,209.14.

Sentence 51 months.

Compare this sentence with Mr. Thorson's. See here and here.

First Sentencing in Offshore Case that Went to Trial

Maricio Cohen Assor and Leon Cohen-Levy, previously blogged here, were sentenced yesterday. I include below links to the SD FL USAO press release and some articles, but here are the bullet points I found interesting:

1. Each was convicted of one count of conspiracy (Klein conspiracy) under 18 USC 371 and 2 counts of filing false tax returns under 26 USC 7212.  The maximum permissible sentence for those counts of conviction was 11 years each.

2. Each received 10 years incarceration (mitigated only if they qualify for the rather minimal good time benefit).

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Sentencing Disparities

I just posted a discussion of the Thorson case here and earlier posted a discussion of the Quellos principals' sentencing here.  For conduct that does not appear dissimilar except that the Quellos' defendants conduct (including relevant conduct) involved far more tax loss, Thorson got 108 months and the Quellos defendants got 50 months.  And, one of the Quellos defendants, like Thorson, was an attorney who failed in his responsibilities as an attorney as fully as did Thorson.  Yet, the sentencing courts imposed incredibly disparate sentences.  While that is certainly possible in a post-Booker world, I am not sure it is to be lauded.  Which, if any of those sentences, are appropriate may depend upon the eye of the beholder, but it does seem to the eye of this beholder that there is some basic unfairness in the existence of that type of disparity.

Addendum 1/30/11 4:26pm:  Let me add this one also, where for a bogus tax shelter, the lawyer got 18 months in prison.  See DOJ Press Release of 1/28/11.

Sentencing Case on Emphasis on Restitution Rather than Incarceration in Financial Crimes Cases

In United States v. Ciccolini, 2010 U.S. Dist. LEXIS 120292 (N.D. OH 11/11/10), a sentencing opinion, the defendant pled guilty to two felony counts -- 1 each of structuring transactions and tax perjury (Section 7206(1)). The defendant, a 68 year old ordained priest, embezzled substantial monies from a residential drug and rehabilitation center. The following are some key points of the decision:

1. The counts were grouped under S.G. 3D1.4. The structuring count produced that highest offense level (22), so 4 levels were added for the tax count, producing an offense level of 26, The offense level of 26 produced a Guidelines sentencing range of 63 - 87 months incarceration.

2. In reaching the offense level of 26, the court rejected an acceptance of responsibility downward adjustment. Although Ciccolini pled guilty, he equivocated about his guilt and some elements (amounts involved, etc.).

3. The Court then moved to a consideration which it labeled "3553(a) Factors and Payment of Restitution." Under Booker and progeny, the Guidelines calculation of a sentencing range is only advisory. The court noted that the defendant had repaid the charity the $1,288,263 he admitted embezzling (although the court noted earlier in the opinion that he had embezzled substantially more) and that he had made substantial payments toward the tax liability. Nevertheless, the Court moved to a philosophical discussion of the interplay between sentencing and restitution in financial crime cases, reasoning:

In crafting a punishment [*27] that will most adequately deter similar conduct by other individuals in the future, the Court is influenced by the writings of Nobel Prize winning economist Gary Becker. In his seminal article on crime and punishment, 4 Professor Becker recommends more emphasis on fines — and less on incarceration — for many white-collar or financial offenses. Becker theorizes that in financial crimes the incarceration of the specific offender is less important than providing a disincentive to future offenders through financial penalties. The Court generally agrees with these propositions and finds them persuasive here. See United States v. Turner, 998 F.2d 534, 535 (7th Cir. 1993) (agreeing with Becker's theory that fines are often an effective means of increasing deterrence). With Becker's theory in mind, the Court finds that imposing a financial penalty in the current case, rather than prison time, will adequately deter future financial crime.
FOOTNOTE
n4 Gary Becker, Crime and Punishment: An Economic Approach, in Essays in the Economics of Crime and Punishment 1, 24-34 (Gary S. Becker & William M. Landes, eds., 1974).

On this reasoning, the court determined that restitution was rather than incarceration was appropriate in this case. The money had been stolen from the charity which was not directly harmed by the offenses charged -- structuring and tax offenses. The charity was hurt by the uncharged conduct of embezzlement. The court held that Section 3663(a)'s definition of victim of the crime permitted the sentencing court to order restitution for the closely related uncharged crime of embezzlement. The court held:

The Court finds that this case law — particularly Carpenter -- allows for a restitution order that takes the Defendant's entire criminal conduct into account where non-charged conduct is closely related to the charged conduct. Thus, as part of its sentence, the Court orders that the Defendant pay restitution to the Interval Brotherhood Home Foundation in the sum of $3,500,000. Although this is a cautious estimate and likely understates the amount embezzled, the sum is a significant portion of the money that was embezzled by the time the offense conduct occurred in 2003 and 2004. The Court concedes that this restitution order is somewhat unusual. Both Carpenter and Jewett deal with situations where a defendant was charged with fraud and a restitution order was issued covering conduct not itself charged, but that was part of the same fraudulent scheme. Here, the money that was stolen from the foundation is somewhat less related to the charged offenses of structuring financial transactions and tax evasion. However, the Court views the rationale underlying those decisions and Congress's amendment of § 3663 as supporting an order of restitution. The charged offense conduct here was designed to conceal and support the broader scheme of embezzlement and can fairly be viewed as part of the same offense conduct.

The Court finds that imposing a restitution order serves the dual purpose of general deterrence under § 3553(a)(2) — i.e. imposing a monetary fine for a financial crime — and also serves the purpose of providing restitution to the victims of the offense conduct under 18 U.S.C. § 3553(a)(7). Thus, the Court views a significant fine together with a restitution order, rather than prison time, as the most effective and just punishment in this case.

Tax crimes are, of course, financial crimes.  I don't have enough information to know whether this sentencing opinion is an outlier or representative of a trend.  I would appreciate the views of readers with a better observation point.

Sentencing Judge Off the Sentencing Reservation

I am somewhat behind on this item out of the Second Circuit, United States v. Woltmann, 610 F.3d 37 (2d Cir. 2010), decided July 6. The case is bizarre because of the trial level sentencing. The Second Circuit reverses the sentence for one count of tax evasion which had been set at the low end of the Guidelines range as calculated in the plea agreement which also stated that the defendant would not appeal a sentence in that range. The problem was that, after the plea agreement was reached, the defendant gave substantial assistance to the Government and, as the plea agreement contemplated, the Government made the appropriate 5K.1 request by letter. The sentencing judge refused to give any effect to the 5K.1 request or other Section 3553(a) factors outside the plea agreement on the notion that the parties had agreed to everything in the plea agreement and the 5K.1 request was an improper attempt to change the plea agreement.

I think those interested in this topic should read the Second Circuit's opinion. Suffice it to say that the defendant's cooperation and the 5K.1 request often come after the plea agreement (otherwise the parameters of the 5K.1 factors would be set forth in the plea agreement )-- and thus adds an element for a more defendant-friendly sentence than would have been contemplated by the plea agreement. Furthermore, and in any event, the court has to determine the sentence not just on the factors enumerated in the plea agreement but based on all of the Section 3553(a) factors in context for the defendant before the court, whether or not they are part of the plea agreement. For the judge to behave in the way he did is just bizarre.

Despite the waiver of right to appeal, the Second Circuit reversed the sentence and remanded for new sentencing by a different judge not hampered by the bizarre sentencing notion articulated by the original sentencing judge. The Court summarized:

Applying these principles, we hold that vacatur is required because the district court: (1) improperly "relied" on the Agreement to the exclusion of the 5K1.1 letter and the § 3553(a) factors; and (2) misread the Agreement as manifesting Woltmann's enforceable concession that any sentence at or below 27 months obviated the need to consider the 5K1.1 letter and the § 3553(a) factors. In so doing, the district court failed to give effect to the parties' expectations and deprived Woltmann of the benefit that he (and the government) agreed he would receive from signing the Agreement (i.e., a weighing of the 5K1.1 letter and the § 3553 factors). At the same time, the court also "abdicated" its judicial responsibility in the way posited by Gomez-Perez, 215 F.3d at 319.

Surprisingly, the Second Circuit was not particularly polite in its expressions of disappointment with the original sentencing judge.  \

Lawyer Pleads Guilty to Two Misdemeanor Counts of Failure to Pay

Various sources report that so-called celebrity lawyer, Mickey Sherman, has pled to two misdemeanor counts of failing to pay $400,000 in tax. (See the Tax Prof Blog for 7/5/10 here (with further links).) The counts to which he pled are under Section 7203 which provides in material part (words omitted for readability):

Any person required under this title to pay any tax who willfully fails to pay such tax shall be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 1 year, or both, together with the costs of prosecution.

There is but a thin line, if any, between Section 7203 (willful failure to pay) and Section 7201 (tax evasion, in this context called evasion of payment). Any practitioner or law student can recite the differing elements, but in a case such as Sherman's, they appear esoteric. (Maybe Sherman intended to just fail to pay but not to evade?) He apparently did file returns for those years (otherwise, presumably, the charge would have been failure to file), but the reports do not state whether he reported the income and just did not pay which might indeed justify a willful failure to pay plea.

Of course, getting a misdemeanor plea sure beats a felony plea, particularly because Sherman wants to continue to practice law without interruption by disbarment or temporary suspension. And, of course, copping a misdemeanor plea does often cap the sentence under the Sentencing Guidelines which are now advisory. In this particular case, however, I am not sure they produce a cap on the Guidelines Sentencing range. My quick and dirty calculation of the Guidelines range with $400,000 tax loss and acceptance of responsibility shows an indicated sentencing range of 18-24 months. (A tax loss just over $400,000 would have produced a sentencing range of 24-30 months.) Assuming the $400,000 tax loss is correct (and won't be increased during the PSR process), then the sentence under the Guidelines is not affected by whether the plea is to the two misdemeanor counts or to two felony counts or even one felony evasion count. That is to say that the Guidelines do not differentiate between misdemeanor and felony counts, except that, for example, two misdemeanor counts cap the sentence at 2 years whereas two felony counts of evasion would cap the sentence at 10 years (well above the Guidelines range). Thus, for example, if the tax loss had been $10,000,000, negotiating the plea of two misdemeanor counts rather than two evasion counts would achieve a real and major benefit under the Guidelines. But here, with a tax loss of $400,000, the indicated range is the same and within the maximum permitted by the counts of conviction whether the plea is to a misdemeanor or a felony.

Of course, the Guidelines are now just advisory. But, in any event, the maximum period of incarceration is still capped by the two misdemeanor counts of conviction. He is likely to get even less than the range. But it is hard to imagine that he will get probation.

As to why DOJ Tax accepted a misdemeanor rather than a felony plea, perhaps that is what the evidence demanded. On the other hand, perhaps DOJ Tax acted from compassion for this defendant to give him a shot at continuing to practice without interruption.

Sentencing Commission Survey of Judges on Sentencing Issues

The Sentencing Commission issued a report titled: Results of Survey of United States District Judges January 2010 through March 2010 (June 2010).

These are the items that interested me on a quick look at the report:

Relevant Conduct (Question 5)

Percentages of judges agreeing that the following should be included in relevant conduct:

• Conduct that was charged in a count that was later dismissed? -- 31 %
• All reasonably foreseeable acts and omissions of others in furtherance of a jointly undertaken criminal activity? 79%
• Conduct that was charged in a count that was later dismissed? 31%
• Uncharged conduct that is presented at trial or admitted by the defendant in court? 77%
•Uncharged conduct referenced only in the presentence report? 32%
• Acquitted conduct? 16%

Standard of Proof in Sentencing Hearings (Question 6)

You should review the table in this question, but there seems to be clear support for a prependerance of the evidence standard for sentencing hearings, even for those findings that increase a sentence.  I think there is some argument that at least some of those findings require either a clear and convincing standard or even a beyond a reasonable doubt standard.  See Alan Ellis & Mark H. Allenbaugh, Standards of Proof at Sentencing, 24 Criminal Justice 62 (Fall 2009)

Departures (Question 14);

There is a high level of agreement (76%) that the departure provisions int the Guidelines Manual do not adequately reflect the reasons for the sentence outside the guideline range, with 65% finding the Guidelines policy statements too restrictive.

General Assessment of the Guidelines and Federal Sentencing (Question 17)

Only about one-third or less agreed with the following statements:

• Overall, the federal sentencing guidelines have reduced unwarranted sentencing disparities among defendants with similar records who have been found guilty of similar conduct.
• Overall, the federal sentencing guidelines have increased certainty in meeting the purposes of sentencing.
• Overall, the federal sentencing guidelines have increased fairness in meeting the purposes of sentencing.

Purposes of Sentencing (Question 19)

Overwhelming support for advisory Guidelines.

Tax Crimes Sentencing Questions

None

Holder Memo on DOJ Policy on Charging and Sentencing

AG Holder issued a memo on charging and sentencing dated May 19, 2010. The memo is here. The memo is full of glittering generalities about the need for fair sentencing based on a defendant's individual circumstances. Holder proclaims:

Indeed, equal justice depends on individualized justice, and smart law enforcement demands it. Accordingly, decisions regarding charging, plea agreements, and advocacy at sentencing must be made on the merits of each case, taking into account an individualized assessment of the defendant's conduct and criminal history and the circumstances relating to commission of the offense (including the impact of the crime on victims), the needs of the communities we serve, and federal resources and priorities.

* * * *

Consistent with the statute and with the advisory sentencing guidelines as the touchstone, prosecutors should seek sentences that reflect the seriousness of the offense, promote respect for the law, provide just punishment, afford deterrence, protect the public, and offer defendants an opportunity for effective rehabilitation. In the typical case, the appropriate balance among these purposes will continue to be reflected by the applicable guidelines range, and prosecutors should generally continue to advocate for a sentence within that range. The advisory guidelines remain important in furthering the goal of national uniformity throughout the federal system. But consistent with the Principles of Federal Prosecution and given the advisory nature of the guidelines, advocacy at sentencing -- like charging decisions and plea agreements -- must also follow from an individualized assessment of the facts and circumstances of each particular case. All prosecutorial requests for departures or variances -- upward or downward -- must be based upon specific and articulable factors, and require supervisory approval.

In an article on the memo, Law.com quotes that ND GA U.S. Attorney's presentation at a Sentencing Commission hearing as saying that, despite Booker and its progeny, federal prosecutors had, prior to the memo, all too often been "the only ones in the courtroom who were still acting like the guidelines were mandatory." Further:

That harmed the department's ability to influence sentencing decisions. Prosecutors, Yates said, "ended up out of the conversation" because they would argue, somewhat robotically, that the government is recommending a guideline sentence. The conversation would then proceed between the judge and the defense attorney. "We need to be part of that conversation," Yates said.

Still, the Justice Department will continue to advocate for guideline sentences "because in the majority of cases we believe that is the fair and appropriate sentence," Yates said. But the Department, she insisted, must also adapt.

Time will tell what all of this means in the real world.  But it may mean that prosecutors relax a little, although I suspect that most sentencing courts were already there, at least in tax cases.

Discussions of the memo may be found at:

Sentencing Law and Policy Blog

Law.com 

WSJ Law Blog

More on the Yip Criminal Case - FBARs and other Matters

I have previously blogged here on the Ninth Circuit's published decision in United States v. Yip, ___ F.3d ___ (9th Cir. 2010). That decision dealt with inclusion of state tax loss in relevant conduct. At the same time as issuing that precedential decision, the Ninth Circuit entered an unpublished decision with limited precedential effect. See United States v. Yip, 2010 U.S. App. LEXIS 4639 (9th Cir. 2009). The unpublished decision cryptically presents its many holdings, but I thought it helpful to present some of them for readers:

In Yip, the defendant appealed from convictions of one count of Klein / defraud conspiray, one count of tax perjury and two counts of failure to file FBARs.

1. The defendant argued that the evidence was insufficient to support his convictions for failure to file FBARs. The Court of Appeals dismissed that claim as follows:

Defendant's accountant, who prepared Defendant's taxes for seven years before the first tax filing at issue here, testified that it was his usual practice to review the foreign account question on Defendant's tax form with him each year. This constituted sufficient evidence for a rational jury to have inferred that Defendant knew of his duty and willfully failed to report the foreign accounts.

Although this holding is too cryptic for meaningful comment, I do note that a return preparer will have an incentive to claim that he or she did cover this question specifically with the taxpayer when, in fact, they may not have actually covered it, at least not as crisply as they imagine it when their own conduct might be under scrutiny.

2. The defendant argued that the Judge had improperly instructed the jury on the Ratzlaf issue. Ratzlaf v. United States, 510 U.S.135 (1994) Many of the readers of this blog know the nuances of Ratzlaf, but for those who do not, I need to set up the context of the argument. Ratzlaf was the Supreme court case involving structuring (piecemealing financial transactions that would otherwise require financial reporting, there the $10,000+ cash deposit reporting requirement). The structuring statute then required that the defendant act willfully. Willfully is a term of art in tax and sometimes in financial crimes which can have several distinct meanings -- indeed, the Supreme Court said on more than one occasion that it’s a word of many meanings. Bryan v. United States, 524 U.S. 184 (1998), citing Spies v. United States, 317 U.S. 492, 497 (1943). In the tax area, the requirement -- sometimes referred to as Cheek willfulness -- is that the defendant have intentionally violated a known legal duty. This is a stricter standard than is often found for criminal laws, where, per the famous slogan, ignorance of the law is not a defense. Ignorance is a defense in crimes requiring willfulness -- at least in those crimes where the willfully requirement is interpreted the same as in tax crimes. In Ratzlaf, the Court interpreted the structuring willfulness requirement the same -- to require that the defendant acted with intent to avoid the reporting requirements and with knowledge that thus avoiding was unlawful. As stated in Ratzlaf, “the Government must prove that the defendant acted with knowledge that his conduct was unlawful.” Ratzlaf v. United States, p. 137. In Ratzlaf, the Government had not proved that the defendant knew that struturing to avoid the reporting requirement was unlawful. The structuring statute was subsequently amended to delete the willfully element, so that the defendant must only act with intent to evade the reporting requirement whether or not he knew such structuring was illegal. In other words, the defendant must know of the law's requirements and act to avoid them, but he does not need to know that avoiding the law's requirements is a unlawful. (OK, I won't go down the rabbit trail you are thinking about.) Despite the change in the structuring statute, Ratzlaf is a case of continuing importance in reporting cases and in tax cases where crimes require willfulness interpreted to require the stronger level of proof that the defendant intentionally violated a known legal duty. The FBAR criminal statute requires that the defendant act willfully, hence Ratzlaf supports the key proposition that the taxpayer must fail to file the FBAR with intent to fail to file and that failing to file is unlawful.  The Ninth Circuit opinion in Yip addresses the taxpayer's Ratzlaf argument as follows (Ratzlaf parallel citations omitted and other case citation omitted):

3. Defendant argues that the jury instruction was defective because it failed to include the knowledge element required by Ratzlaf v. United States, 510 U.S. 135, 149 1994). We review for plain error. The instruction was not erroneous, because it informed the jury that conviction required a finding that Defendant knew that he had a legal duty to report his foreign bank accounts.

I suppose that, from a practical perspective, that is a cryptic and fair holding. I would have liked to see more from the court. But then it is an unpublished decision of little precedential effect except for the defendant involved, and the court was not writing for me.

3. Following through on this line, the Court addressed the defendant's argument that the instruction on the FBAR counts was invalid because it failed to instruct the jury on the willfulness element. The Court reasoned, again cryptically (case citation omitted):

The omission of the mens rea was an error, and an obvious one. However, not every error affects a defendant's substantial rights. This one did not. The jury found that Defendant knew of his duty to file the form. Because the jury found that Defendant willfully filed a 1999 return falsely stating that he had no foreign bank account, it almost certainly would have found that his failure to file the associated Treasury forms in 1998 and 1999, as he knew that he had a duty to do, was also willful.

This seems somewhat circular, but again the court ruled on the basis of the plain error standard.

4. The defendant then raised an actus reus argument. Here is the entire discussion (case citations omitted):

5. Defendant argues that the jury instruction was defective because it failed to include the actus reus for the counts of failure to file a Treasury form reporting his foreign bank accounts in 1998 and 1999. We review for plain error. The omission of the actus reus was an obvious error, but it did not affect Defendant's substantial rights. At trial, Defendant did not dispute his failure to file the forms.

5. This one is just too cryptic to do anything other than cut & paste (case citation omitted):

7. Defendant argues that his sentence of 67 months' imprisonment for conviction of conspiracy to defraud the United States exceeds the statutory maximum sentence of 60 months. 18 U.S.C. § 371. We review for plain error. We hold that the district court plainly erred in sentencing Defendant to a sentence in excess of the statutory maximum. Id. We vacate Defendant's sentence on the conspiracy conviction and remand for resentencing in conformity with 18 U.S.C. § 371.

6. This one's pretty good (I delete only the all case citations and references except Booker):

8. Defendant argues that the district court erred by sentencing him under the 2001 version of the Sentencing Guidelines on counts completed earlier than 2001. We review for plain error. A continuing offense must be sentenced under the Guidelines version in effect at the conclusion of the offense, if a later version is unfavorable to the defendant. n2 However, when a defendant is convicted of both a continuing offense and offenses completed earlier, the earlier offenses must be sentenced under the version in effect when they were completed. Here, the conspiracy count was properly sentenced under the 2001 Guidelines because the last overt acts of the conspiracy occurred after that version took effect. But the district court erred in sentencing Defendant under the 2001 Sentencing Guidelines for the crimes that were completed in earlier years--namely, filing false tax returns and failing to file the Treasury forms. The error was clear and obvious under [omitted cases]. It affected Defendant's substantial rights because the 2001 version of § 2T4.1 resulted in a lengthier sentence than the range recommended by the earlier version. Sentencing Defendant to a term of imprisonment longer than that recommended by a proper application of the Guidelines seriously affects the fairness of judicial proceedings. We vacate Defendant's sentence on Counts 4 through 7, and 9 through 11. We remand to the district court for resentencing under the proper versions of the Guidelines.

n2 We note that there is some uncertainty as to whether the Ex Post Facto Clause is implicated by the advisory use of the Sentencing Guidelines after United States v. Booker, 543 U.S. 220 (2005). We need not and do not decide whether Booker is irreconcilable with our [other case] holdings, because neither of the parties before us so contends.

7. The Court clearly got this one right (case citations omitted):

13. Defendant argues that the district court erred by increasing his offense level under the § 2T1.1(b)(2) enhancement for the use of sophisticated means. Defendant's use of foreign bank accounts to hide his unreported income and the creation of several sham loans to conceal his crimes were not necessary for the commission of the crimes. These activities were sufficiently complex to support application of the enhancement under all relevant versions of the Sentencing Guidelines. U.S.S.G. § 2T1.1 cmt. n.4. The district court properly imposed the sentencing enhancement.

8. I don't think there is enough information provided to figure out what this is about other than the Government's improper claim of work product privilege (case citations omitted, except for Hickman).

16. Defendant argues that the district court erred in ruling that the government had provided the information requested by Defendant. We review for clear error. The district court clearly erred because the government claimed work-product privilege for the material. However, the outcome would have been the same even had the district court recognized that the government had not provided the material, because no exception from the privilege applied. Hickman v. Taylor, 329 U.S. 495 (1947). Thus, the error was harmless.

Fourth Circuit Cites S.G. Tax Sentencing Policy in Reversing Sentencing Variance

In United States v. Engle, ___ F.3d ___ (4th Cir. 2010), decided 1/13/10, the Fourth Circuit remanded an exceptional sentencing variance emphasizing the Sentencing Commission's introductory comment in S.G. Ch. 2, Pt. T:

The criminal tax laws are designed to protect the public interest in preserving the integrity of the nation's tax system. Criminal tax prosecutions serve to punish the violator and promote respect for the tax laws. Because of the limited number of criminal tax prosecutions relative to the estimated incidence of such violations, deterring others from violating the tax laws is a primary consideration underlying these guidelines. Recognition that the sentence for a criminal tax case will be commensurate with the gravity of the offense should act as a deterrent to would-be violators.

The Court also noted the following policy statement that the Guidelines

classify as serious many offenses for which probation was frequently given and provide for at least a short period of imprisonment in such cases. The Commission concluded that the definite prospect of prison, even though the term may be short, will serve as a significant deterrent, particularly when compared with pre-guidelines practice where probation, not prison, was the norm.

The factual background was this (at least the parts I feel most material):

The criminal information charged Engle with tax evasion for the 1998 tax year only, although the information alleged that Engle had evaded taxes for sixteen years between 1984 and 2002 and owed taxes of more than $600,000. With interest and penalties included, Engle's total tax liability exceeded $2 million. Engle's actions to avoid taxes included providing false information to the Internal Revenue Service, placing assets in others' names, and funneling income through shell corporations that he controlled.

Engle pleaded guilty to the information in 2004 and proceeded to sentencing almost two years later, in February 2006. Based on a total offense level of 17 and a category II criminal history, the presentence report calculated Engle's advisory sentencing range as 27-33 months. The district court concluded that Engle's criminal history was overstated and therefore reduced Engle's criminal history to category I, yielding an advisory sentencing range of 24-30 months.

The sentencing court clearly wanted a variance -- granting it not once but twice and chastising the Government attorney for wanting blood rather than money. The second time the sentencing court said:

It . . . seems to me to be appropriate to come up with a variance that would reflect this man's ability to pay this money. And I think that considering all of that -- I don't see any unwarranted sentencing disparities. Look at the Gall case. This isn't a particularly terrible . . . variance. It seems to be, then, that the sentence I originally thought about[, w]hich was fours years probation, 18 months house arrest on electronic monitoring with work release, and he will be permitted to make trips to China as demanded by his employer.

In reversing, after emphasizing the policy grounds noted above, the Court of Appeals said:

This case is a "mine-run" tax-evasion case only in the most generous (to Engle) understanding of that phrase. Engle evaded his tax responsibilities for sixteen years, altered tax returns prepared by his accountants, directed that income to him be paid to shell corporations in an effort to avoid withholding and reporting requirements, and lied to the IRS about the existence of these corporate accounts. Yet, with facts that could perhaps be viewed as warranting an above-Guidelines sentence, the district court imposed a significantly below-Guidelines sentence, based on views that are at odds with the clearly expressed policy views of the Sentencing Commission. The district court did not acknowledge the policy statements, and there is nothing in the statements made by the court during sentencing that offer any insight into why the court believed that a prison term was not required. There is no explanation of why the court believed that allowing Engle to continue to work and travel was consistent with the seriousness of his offense or that it would provide adequate deterrence for other would-be tax evaders. Moreover, as noted above, for more than four years after pleading guilty to tax evasion, Engle continued to work and travel, yet he paid nothing towards his tax debt. It was not until two weeks before the second sentencing hearing that Engle made the first payment (of less than $500), and even that nominal payment was spurred on by an inquiry from the IRS. The absence of any payments during a time when there is the greatest incentive for a defendant to be on his best behavior raises questions about the district court's belief that restitution would provide sufficient deterrence to Engle himself.

Finally, the Court of Appeals also chastised the sentencing court for giving too much emphasis to foregoing incarceration in order to permit the defendant to pay his taxes.  The Court of Appeals said (some case and some record citations omitted for readability):

The district court made it clear that, but for Engle's earning capacity, it would have imposed a within-Guidelines sentence of imprisonment: "[A]bsent the apparent ability to generate the income, I would simply impose a Guideline sentence and be done with it." In fact, other statements suggested that the district court believed not simply that Engle's payment of his tax debt was desirable, but that it was improper for the government to seek anything other than restitution. See J.A. 60 (asking the government whether the government wanted "blood or money"); J.A. 63 ("I'm concerned that I'm not hearing any effort to try to balance this out other than let's put him in jail and take away his livelihood, which will destroy the ability of the government to collect the money. I don't see how that necessarily promotes respect for the law.").

Reduced to its essence, the district court's approach means that rich tax-evaders will avoid prison, but poor tax-evaders will almost certainly go to jail. Such an approach, where prison or probation depends on the defendant's economic status, is impermissible. That was the consistent view of courts before Booker and its progeny.

While Booker and Gall have worked a substantial change in the manner in which sentencings are conducted and have vested district courts with substantially broader discretion than they possessed under the former sentencing regime, we do not believe the change wrought by Booker was so great that it permits district courts to rest a sentencing decision exclusively on such constitutionally suspect grounds. See Bearden v. Georgia, 461 U.S. 660, 661 (1983) (noting the "impermissibility of imprisoning a defendant solely because of his lack of financial resources"); United States v. Seacott, 15 F.3d 1380, 1389 (7th Cir. 1994) ("Allowing sentencing courts to depart downward based on a defendant's ability to make restitution would thwart the intent of the guidelines to punish financial crimes through terms of imprisonment by allowing those who could pay to escape prison. It would also create an unconstitutional system where the rich could in effect buy their way out of prison sentences."); cf. United States v. Tomko, 562 F.3d 558, 570 (3d Cir. 2009) (en banc) (post-Gall case affirming probationary sentence in tax evasion case; rejecting the government's claim that the district court permitted the defendant "to buy his way out of prison" because "the record exhibits no connection between the fine imposed and the failure to incarcerate").

We do not mean to suggest that the economic status of a defendant is never relevant in sentencing. It is certainly relevant when setting the amount of a fine or establishing a payment schedule, and it may well have relevance in other ways in other cases. And while we recognize the broad discretion possessed by district courts with regard to sentencing matters, we have no difficulty concluding that in this case, the district court abused that discretion. Accordingly, we conclude that the sentence imposed by the district court was substantively unreasonable because the sentencing decision was driven solely by Engle's ability to pay restitution.

[JAT Note: for a similar application of the Sentencing Guidelines' policy with respect to tax offenses, see United States v. Ture, 450 F.3d 352, 357-359 (8th Cir. 2006).]

Finally, of course, the real subtheme here is that Court of Appeals apparently believed that the particular district judge just did not have the stomach for criminal sentencing as indicated in the following footnote to its concluding mandate that a different district judge hear the case on remand (the linked decision, although a nonprecedential decision, might be worth a read).

n4 The district judge in this case also presided over the tax-evasion trials and sentencings in United States v. Baucom, No. 08-4493, and United States v. Davis, No. 08-4512, cases that, though not formally consolidated with this case, were argued before this court seriatim with this appeal. In the sentencing hearing for Davis, the district judge, who has taken senior status, stated that he no longer intended to handle criminal matters.

Sometimes Booker Works Against the Taxpayer

Booker now gives the sentencing court considerable discretion to vary from the Guideline Sentence calculation. In tax cases, such variances are usually defendant-friendly -- i.e., the sentencing court sentences below the Guidelines range. If the Government is unhappy with the downward variance and appeals, the court of appeals will give considerable deference to the sentencing judge in the application of 18 U.S.C. § 3553(a). This works in reverse as well -- i.e., the sentencing court can impose an above-Guidelines sentence that will receive considerable Booker deference on appeal. See particularly United States v. Tomko, 562 F.3d 558, 564, 567 (3d Cir. 2009) (en banc). An above Guidelines sentence does not happen often in tax cases, but it does happen.

In a recent nonprecedential decision, the Court of Appeals addressed this type of above guidelines sentence. In United States v. Evans (3d Cir. No. 08-2528), the sentencing judge sentenced a tax protestor to an above guidelines sentence. The defendant was not pleased and appealed. The Court said (footnote omitted):

Finally, Evans argues that the District Court improperly relied on the two civil tax suits filed by Evans against the United States in its consideration of the 18 U.S.C. § 3553(a) factors. This is Evans' only complaint regarding his sentencing; he does not challenge the calculation of the Guidelines range or the Court's consideration of the § 3553(a) factors in general.

We review the District Court's sentence for reasonableness under an abuse of discretion standard. United States v. Tomko, 562 F.3d 558, 564, 567 (3d Cir. 2009) (en banc). "Where, as here, a district court decides to vary from the Guidelines' recommendations, we 'must give due deference to the district court's decision that the § 3553(a) factors, on a whole, justify the extent of the variance.'" Id. at 561 (quoting Gall v. United States, 128 S. Ct. 586, 597 (2007)).

The Guidelines range was 15 to 21 months. The District Court imposed an above-Guidelines sentence of 36 months. It discussed at length the factors set forth at 18 U.S.C. § 3553(a). We do not think it was improper for the Court, in evaluating those factors (including the nature and circumstances of the offense), to consider that, despite several courts' unequivocal rejection of Evans' claims that his income was not subject to taxation, Evans continued to violate the law. The Court noted Evans' disrespect for the court process, his disdainful interactions with IRS agents, the need for him genuinely to appreciate the authority of the law, and the need to deter the public. We have no hesitancy in concluding that it rationally and meaningfully considered the § 3553(a) factors, and the sentence of 36 months was reasonable in this case.

Heavy Handedness in Charging and Forcing Pleas

I point readers to an excellent article in yesterday's Wall Street Journal, John A. Emshwiller and Nathan Koppel, Plea Bargains Get Renewed Scrutiny (WSJ 12/19/09). I previously blogged here that the Judge had dismissed indictments against some broadcom defendants for prosecutorial abuse. At the same time, the Judge voided a prior guilty plea in the case. Here is the article's intro:

A surprise twist in the criminal case against Broadcom Corp. co-founder Henry Samueli again raises questions about plea bargains, one of the most important and controversial aspects of the justice system.

In a Santa Ana, Calif., court last week, federal Judge Cormac Carney dismissed the criminal complaint charging Mr. Samueli with lying to the Securities and Exchange Commission in its investigation of whether Broadcom misstated its earnings by improperly accounting for executive stock options. Judge Carney's dismissal came even though Mr. Samueli had stood before him in 2008 and pleaded guilty to that very crime.

Mr. Samueli did what lawyers and legal scholars fear a disturbing number of other people have done: pleaded guilty to a crime they didn't commit or at least believed they didn't commit. These defendants often end up choosing that route because they feel trapped in a corner, or fear getting stuck with a long prison sentence if they go to trial and lose.

I have previously blogged on facets of this matter here. The major aspect of the problem is the combination of the Government's virtually unlimited charging decisions permitting the piling or stacking on of counts and the large amounts involved in some white collar crimes. The defendant is at risk of major incarceration if he does not plea and, as in Samueli, may be convinced that he is guilty when he is really not in order to make the required allocation.

I obvserved this phenomenon in the KPMG criminal case. The defendants through their own alleged conduct and Pinkerton conspiracy concepts faced draconian Guidelines calculations driven principally by the alleged tax loss. Pre-Booker that was a major problem that the Government sought to exploit by offering a plea first to two counts and then to one. The Government forced out one guilty plea while sentencing was in flux. Even after Booker, the problem was only mitigated by the discretion given judges, because they started with the Guidelines calculations.

Fortunately, as in the broadcom case, Judges can mitigate that Government's abuse of power in forcing plea agreements. For Samueli, the Judge simply overturned the guilty plea. In KPMG criminal tax case, the Judge sentenced David Rivkin to one year of probation, using the Booker discretion to effectively nullify all but the collateral consequences and stigma of the guilty plea.

Another UBS Client is Sentenced

Press reports note that another UBS client was sentenced on 11/6. The highlights from the first I have seen, a Bloomberg report here.

1. Guts of the Guilty Plea (DOJ Tax Press Release here): The guilty plea was a bare bones plea to a single count of filing false income tax return (§ 7206(1), with a maximum possible sentence of 3 years (less good time credit of about 15%). The details which are often seen in plea agreements were left to flesh out in the sentencing process.

2. Key Sentencing Factors as Reported; (i) taxes evaded apparently "less than $26,000 for 2001-2007 (so why'd this guy do it???); (ii) $1.89 million FBAR penalty (this amount may include the civil tax penalty which, in any event on the numbers report would have been around $19,500 (does require accrual of interest)); and (iii) contrition for having done it (subtext for having been caught).

3. Sentence: 2 months of home incarceration; 150 (about 5 months) days home confinement; 215 days probation (about 7 months).

4. Leniency. Prosecutors sought leniency because of substantial assistance. I have not seen the prosecutors' motion, but will post further when and if I see it. The article does report that publicity about his case (presumably his guilty plea) helped spur more than 7,500 taxpayers to join the voluntary disclosure program that ended 10/15/2009. (As I have mentioned before, counsel in all criminal cases should encourage the Government to publicize the indictment, conviction and sentence so that this downward sentencing factor may be in play).

5. Judge's comments about offshore accounts:

“I think the public has become weary about people with all the trappings of success becoming involved in tax evasion,” said U.S. District Judge James Cohn in federal court in Fort Lauderdale, Florida. “Why does one set up offshore banking accounts? I’m sorry, it’s to set up to hide money and deceive the government.”

6. Collateral Consequences. Moran is a yacht broker. The article reports that, according to this lawyer, he will lose his Florida license to sell new yachts. [JAT tacky comment: Perhaps he will take that business offshore, which would not seem to be too difficult for yacht sales.] Tax crimes practitioners and students are aware that there may be collateral consequences of guilty pleas. One of the problems that surfaced in the voluntary disclosure initiative was whether such collateral consequences might attend entering the program; even though there will be no conviction, the required cooperation may require a taxpayer to admit facts from which a crime may be inferred (even if perhaps not a direct admission).

JAT additional comment: the lenient sentencing relative to other tax crimes continues. See my question to readers here.

Second UBS Client, Chernick, Sentenced

The press reports today proclaim the sentencing of Jeff Chernick on October 30. (See, e.g., the associated press article here.) The sentence is 3 months of incarceration (no good time credit), 6 months of home confinement, and no fine. The Government had requested 9 months incarceration for the alleged substantial cooperation Chernick had given, but probably signaled the judge that some home confinement may be OK. The Government's 9 months request was 50% of the low end of the Sentencing Guidelines calculated range. The 3 incarceration and 6 months home confinement gives the Government its request of 9 months, but, as I have said before, if you must be incarcerated, home confinement is the way to go.

The sentencing judge, Judge Cohn, was unmoved by a request for probation, reasoning that a sentencing that amounts to a "slap on the wrist" is "negative publicity," which "informs the public that you can cheat on your income taxes and get away with probation."

Chernick paid back taxes and a $4.5 million penalty. In the plea agreement he had agreed to a 50% FBAR penalty, which on the reported $8 + million foreign accounts would account for most of the reported penalty.

Chernick also prostrated himself (figuratively) before the court with the appropriate mea culpa and contrition.

Chernick had accounts at UBS and NZB Neue Zurcher Bank (sometimes NZB Neue Zuercher Bank).

Chernick had attempted a voluntary disclosure (even before the special initiative was announced and found that the Government already had him in its sight.

JAT editorial comment: I am not sure I see a material difference between Rubinstein (1 year home confinement) and Chernick (3 months incarceration and 6 months home confinement).

Questions to readers: Do you see a material difference between persons who cheat through foreign accounts and persons who cheat the old fashion, historically more visible way who do not get such lenient sentencing (the ordinary cheats who are routinely sentenced to significant jail time, even post-Booker)? What is the explanation(s) for the leniency for cheating through foreign accounts? (In this regard, I assume that, at least in the gut, there may be some difference between (i) a foreign account tax cheat who funds the foreign account with U.S. tax paid money or money not subject to U.S. tax and (ii) a foreign account tax cheat who funds the foreign account with money that was subject to U.S. tax but U.S. tax was not reported and paid (e.g., funds that went to the foreign account without U.S. reporting or by claiming improper deductions).)

First UBS Client, Rubinstein, Sentenced

The New York Times Deal Book and other publications report today that the first UBS client to plead in the current round, Steven Michael Rubinstein (previously blogged here), was sentenced yesterday to home confinement for one year. If you gotta go, that's the way to go.

Rubinstein is the first of the former UBS clients to be sentenced. Jeffrey Chernick (blogged here and here) will be sentenced tomorrow. I have not seen the sentencing filings in the Chernick case. If any reader has one or more of those filings, I would appreciate receiving them via email -- jack@tjtaxlaw.com.

The New York Times Deal Book report is here.

DOJ SG 5K1 and § 3553(e) Departure Request for Rubinstein

You will recall that Mr. Rubinstein was the first of the UBS clients to plead (see my original Get-in-Line Brother blog here). Mr. Rubinstein pled to a § 7260(1) count with a maximum incarceration period of 3 years. Sentencing time is nigh. Apparently the Guideline range for Mr. Rubinstein is 18 to 24 months. The Government has filed it's SG 5K1 and § 3553(e) request which, in its entirety (exclusive of sealed submissions), is:

1. On April 1, 2009, defendant Steven Michael Rubinstein was charged with a complaint alleging that he filed a false tax return, in violation of Title 18, United States Code Section 7206(1). On June 26, 2009, the defendant waived indictment, and entered a plea of guilty to a one-count Information charging the same. The defendant admitted to failing to disclose of the existence of and the income associated with an undeclared Swiss bank account at UBS, AG.
2. Pursuant to an agreement with the United States, the defendant cooperated with the United States in its ongoing investigation into offshore tax evasion. Since entering into this agreement, the defendant has provided substantial assistance in the investigation of others who have committed offenses against the United States. This substantial assistance has been timely, significant, useful, truthful, complete, and reliable.
3. In February 2009, pursuant to a deferred prosecution agreement, UBS AG, Switzerland's largest bank, provided the United States Department of Justice the identities and account information for certain United States clients that were believed to have not disclosed the existence of or reported the income associated with offshore bank accounts at UBS in Switzerland.
4. Information provided by UBS pursuant to the deferred prosecution agreement has led to the investigation of more than 150 United States taxpayers. The defendant was the first such person to be prosecuted. To date, six additional former UBS customers have been prosecuted throughout the United States. Additionally, a federal grand jury in the Southern District of Florida returned a one-count conspiracy indictment against Swiss banker, Hansruedi Schumacher, and Swiss attorney, Matthias Rickenbach (Case No. 09-60210-CR-HURLEY).
5. On the heals of the deferred prosecution agreement, the Internal Revenue Service announced a six-month program to encourage Americans to voluntarily disclose the existence of offshore bank accounts. In exchange for coming forward, the IRS agreed to reduced penalties and to not recommend prosecution of the taxpayer. In an average year, less than 100 individuals take advantage of the Internal Revenue Service's voluntary disclosure program. The IRS recently announced that so far this year more than 7,500 taxpayers voluntarily disclosed the existence of their offshore assets.
6. The prosecution and guilty plea of this defendant has generated tremendous publicity. This publicity, without a doubt, contributed, in part, to the drastic increase of taxpayers who voluntarily disclosed their offshore accounts to the IRS.
7. The United States will provide, under seal, to this Court details of additional substantial assistance provided by the defendant.
8. The defendant's current advisory guideline range is 18 to 24 months. Pursuant to the plea agreement, the United States will ask this Court to sentence the defendant to the low-end of the advisory guideline range. Pursuant to Title 18, United States Code, Section 3553(e), and Section 5K1.1, United States Sentencing Guidelines, the United States asks this Court to reduce the defendant's sentence by one-third percent and to impose a sentence of 12 months.

Just a couple of points about this filing:

1. Paragraph 8 needs some clarification. Context makes clear that the Government did not intend to be stingy in its recommendation of a "one third percent" reduction which would be virtually nothing. The Government really meant a "one-third" reduction from 18 months which is the bottom of the advisory range. And, of course, even here, surely the Government does not really mean a 12 month sentence which would insure Mr. Rubinstein's incarceration for a longer period than if he receives a 12 month and 1 day sentence (the old good time credit thing).

2. The Government says that its voluntary disclosure program normally generates only about 100 disclosures by individuals a year. The Government cannot be including the quiet disclosures made by filings with the service center. I have only anecdotal experience from my own practice and talking with others having similar practices, but I think it fair to project from this experience that the quiet disclosures are in the thousands each year. Of course, there is no way for the Government to quantify that since no one that I know of embazons in red on the amended returns "Voluntary Disclosure - Quiet Type" (indeed, then it would not be quiet). Quiet voluntary disclosures are an important compliance measure to collect the back revenue (with interest) and get those now compliant taxpayers back into the system or back fully into the system.

3. DOJ Tax wants to give credit for the effect Rubinstein's plea had on encouraging others to join the voluntary disclosure program. Yet, since DOJ Tax usually seeks publicity to encourage others to do right, should that be an extra factor warranting a downward departure? Surely, now practitioners will argue that it does. Perhaps they can argue that the publicity of the convictions spread by the news media and even blogs such as this warrant departure, particularly if the Government makes a 5K1 departure request for other reasons.