Altria # 4 - Second Circuit Declines Altria's Invitiation to Sustain a BS Tax Shelter (9/30/11)

The Second Circuit recently rejected another hokey tax shelter in Altria Group, Incorporated v. United States, ___ F.3d ___, 2011 U.S. App. LEXIS 19644 (2d Cir. 2011), here. I have previously blogged on the trial level results in the following blogs: (i) Altria # 1 - Frank Lyon and tax shelters (3/20/10), here, (2) Altria #2 - Economic Substance and Juries (3/22/10), here, and (iii) Altria #3 - What Were Those Guys Smoking? (3/23/10), here.

The only question I have about the appeal is whether Altria really harbored the fantasy that, having failed to smoke these these shelters past the jury and then the district judge, the Second Circuit just would not be paying attention? Altria's goofy adventures -- first in getting into these shelters and then thinking that it could con the jury and the judges -- should be the best refutation that if we just let business people be business people they will make good decisions.
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Superseding Indictment for Dr. Ahuja Adding Conspiracy Count (9/28/11)

Jeff Neiman posted a blog this morning in the superseding indictment for Dr. Ahuja. See Jeff Neiman, Superseding Indictment: HSBC India Customer Charged (9/28/11), here. Jeff's Blog entry has a good discussion and link to the superseding indictment, so I recommend it and will not repeat it here, other than to note that the allegations which flesh out any conspiracy charge are quite interesting. I have previously blogged the original indictment which did not include the conspiracy charge, here.
I do note the nature of conspiracy charges in this context by this cut and paste from my book (footnotes omitted):

Not surprisingly, therefore, the Government trots out the conspiracy charge whenever it can imagine more than one bad guy behind the tree – it is so easy to do. The conspiracy count allegations are framed as a cascade of allegations telling a damning story (if true and, although literally true, not misleading), but sometimes producing more heat than light. This contrasts with counts for the tax offenses which are dry, sparse, boring, and usually not even flowered up for dramatic effect. The benefits for the Government are great, and the downsides are few; after all, the prosecutors’ life and liberty are not at stake. This means, of course, that the Government’s power to tack on conspiracy charges can be abused, particularly with a weapon as potent and elastic as conspiracy. The Supreme Court has noted that:

We agree that indictments under the broad language of the general conspiracy statute must be scrutinized carefully as to each of the charged defendants because of the possibility, inherent in a criminal conspiracy charge, that its wide net may ensnare the innocent as well as the culpable.

Addendum on 9/29/11:
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Another UBS Client Pleads -- With the Baggage of Illegal Income (9/27/11)

Michael A. Hase, a former comptroller for the U.S. Agency for International Development, has pled guilty to Theft of Government Property and Tax Perjury. The bullet points are below, but I caution the reader that this is an illegal source income case where the Government's main angst is about the conduct underlying the Theft Count. This limits the ability to make inferences to legal source income as is the bulk of the cases involving the current offshore financial account initiative. Notwithstanding that, since the tax Guidelines produced the highest offense level, the tax Guidelines governed with one level added for the theft crime. I link the Information here, the Plea Agreement here, the Statement of Facts here, and the USAO Press Release here.

Taxpayer: Michael A.Hase
Bank : UBS AG and its predecessor Swiss Bank Corporation Jersey Islands;
Entities: No
Guilt: By Plea Agreement - 2 counts - theft of government property 18 USC 641 (one count); tax perjury (Section 7206(1)) (1 count covering 10 years).
Maximum Incarceration Period: 13 years (10 years on theft count; 3 years on tax count)
Admits: Failure to File FBARs but not charged or pled
Unreported Income: $909,156.66
Tax Loss: $254,564.14
FBAR Penalty: $1.937,934.53 + (Based on 50% of the indicated highest balance of $3,875,934 in 2006).
Offense Level (Before AOR): 21 (20 for tax count plus 1 for multiple offense)
Offense Level After AOR: 18 (Criminal History I).
Guidelines Range: 27 - 33 months
Restitution: $36,325.52 (for theft count)
Court: D DC.
Judge: ?
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