Prosecuting Corporate Employees and Officers, with Focus on Swiss Banks (1/15/16)

I have previously blogged on Professor Brandon Garrett (UVA Law) who have carved out an academic niche on how the Government deals with corporate crime, particularly large corporate crime (the too big to jail group).  See e.g., Judge Jed Rakoff Reviews Brandon Garrett's Book on Too Big to Jail: How Prosecutors Compromise with Corporations (Federal Tax Crimes Blog 2/10/15), here.  At the risk of oversimplifying his arguments, I summarize them in part relevant to this blog entry:  When the Government goes after corporate misconduct, it too often focuses only on the corporation in terms of criminal sanctions and not the individuals, particularly those higher up the chain, who committed the underlying conduct.  Corporations cannot go to jail; individuals can. Prosecuting and convicting individuals in addition to corporations could, he thinks, provide more front-end incentive for individuals to forego illegal conduct within the corporations.  However, as fans of tax crimes know at least anecdotally, it is hard to convict higher level corporate officers for conduct that their underlings actually commit.  The poster child example is the acquittal of Raoul Weil, a high-level UBS banker who "remoted" himself from the dirty work of actually servicing U.S. taxpayers seeking to evade U.S. tax.  See e.g., Raoul Weil Found Not Guilty (Federal Tax Crimes 11/3/14; 11/6/14), here.

One might turn a common phrase and say that lifeless, breathless, unthinking, unfeeling corporations do not commit crimes; people do.  Still in our jurisprudence, corporations can commit crimes.  They just can't be jailed.  To the extent that actual incarceration incentivizes people to avoid misconduct, people should be jailed.  In September of 2015, DOJ announced a new policy of more aggressively pursuing people for misconduct in corporations.  See the DAG memo here and my blog entry, New DOJ Policy on Prosecuting Individuals Beyond Corporate Crime (Federal Tax Crimes Blog 9/10/15), here.

Professor Garrett has a new article that updates in summary fashion his research.  The Year Banks Finally Paid (Slate 1/13/16), here.  The following are excerpts:

Nevertheless, we need to keep asking whether this strategy of chasing dollars rather than changing practices and prosecuting executives makes any sense. In the past decade, data I have collected show that federal prosecutors have set new records each year in corporate fines. For all their success and zeal, however, it’s not clear that fines alone are stopping bad actors on Wall Street. 

* * * * 

A remarkable number of banks, 80 of them, finalized cases with federal prosecutors. Most were Swiss banks that settled out of court as part of a DOJ Tax Division program designed to incentivize them to come clean or face the music. Next year we will see still more cases with less-cooperative Swiss banks that won’t get such lenient deals. More mammoth bank cases lumber along in the courts; last spring, several major banks, including Wall Street giants JPMorgan Chase and Citicorp, agreed to plead guilty in cases relating to foreign-exchange currency manipulation. Those cases have not resulted in sentencing yet, but when they do, prosecutors will rake in $5 billion more in fines. 

* * * * 

Banks pay the fines, but bankers don’t usually do any time. I have found that among the 66 cases of financial institutions that received deferred or nonprosecution agreements from federal prosecutors from 2001 to 2014, only 23 of them—33 percent—had any employees prosecuted. 

Now, I don't have Professor Garrett's expertise and have not spent enough time on his marvelous web site at UVA Law, here, but I thought I would add some thoughts from my even narrower niche of the universe in which he teaches -- the offshore account and enabler activities.

As all of the readers of this blog know, offshore banks and other financial institutions -- poster children being Swiss Banks -- have for years enabled U.S. taxpayers to evade tax.  The U.S. taxpayers evading tax committed tax and tax-related (including FBAR) crimes; the Swiss Banks, their employees and related enablers committed crimes.  The Government has prosecuted and entered a number of DPAs and NPAs with Swiss Banks, and has prosecuted a number of Swiss bankers and other enablers.  My latest count of the Swisss bankers shows over 40 individual "enablers", many of whom are or were Swiss bankers.  Many of these remain fugitives (about which more later).

An important requirement of US DOJ Swiss Bank program is that the participating Category 2 Banks must rat on their employees committing misconduct.  So, since the Category 2 part of the program is now winding up in terms of reaching NPAs with the Banks, I expect that DOJ will be bringing more indictments of Swiss Bank employees.  Those employees may not be able to avoid indictment, but they can avoid the prosecution by not coming into the U.S.  But, as Mr. Weil found out, traveling outside Switzerland is risky.  So, as I have noted before, many Swiss bankers (and other enablers, such a lawyers) have constrained their travel or take risk when they travel.  I have said before that this risk and fear may make Switzerland (which will not extradite for tax crimes) a kind of Club Fed -- a great place to be but somewhat confining if you can't leave it.

One issue inspired by Professor Garrett's research is whether higher-ups with the banks can be prosecuted successfully.  I mentioned Mr. Weil, the high level UBS officer, who mounted a successful defense that he was too remote from the criminal conduct to be responsible for it.  DOJ had the full cooperation of UBS and still could not convict Weil.  In the Swiss banker context, I will refer to that defense as the Weil defense.  My suspicion -- based on no real hard information -- is that in serving up the gory details of its employees' misconduct to DOJ, the Swiss Banks liberally applied the Weil defense to the fullest possible in order to avoid incriminating the higher ups.  In other words, I suspect, they served up minions and deflected from the higher ups to the extent they could with the Weil defense.  If that happened, I suspect it happened by omitting key information on the notion that, under the Weil defense, the higher-up conduct was not criminal.

One final note. the statute of limitations for tax crimes is suspended while the person "is outside the United States or is a fugitive from justice within the meaning of section 3290 of Title 18 of the United States Code."  26 USC 6531 (flush language), here.  So the risk of prosecution for this group is likely to be indefinite.  And, if DOJ does start with the minion employees, it may deploy the usual prosecution tactic of working their way up toward the top on the back of the minion employees.

Procedurally Taxing Discusses President's State of the Union Comment on Offshore Accounts (1/15/16)

Leslie Book, professor at Villanova and blogger at Procedurally Taxing, has this review of tax issues in the President's State of the Union address.  State of the Union: Tax Administration a Small But Important Part of the Speech (Procedurally Taxing 1/15/15), here.  In part here relevant, he discusses the President's comment:  It’s sure not the average family watching tonight that avoids paying taxes through offshore accounts."  Book then launches the following discussion (excerpts only):

Offshore Evasion 

* * * * 

I recently read an interesting article on offshore evasion by Professor Cass Sunstein in the New York Review of Books, called Parking the Big Money. The article reviewed Professor Gabriel Zucman’s The Hidden Wealth of Nations: The Scourge of Tax Havens as well as a film called The Price We Pay. Zucman’s book takes a crack at putting a price tag on offshore evasion, using an approach that compares the world’s liabilities to the world’s assets, noting that “as far back as statistics go, there is a ‘hole’; if we look at the world balance sheet, more financial assets are recorded as liabilities than as assets, as if planet Earth were in part held by Mars.” 

Sunstein continues:\ 

In 2015, for example, the nations of the world reported $2 trillion as mutual fund holdings in Luxembourg; this is the total of recorded liabilities. But Luxembourg’s own statisticians calculated that worldwide, $3.5 trillion in mutual fund holdings were kept in Luxembourg; that is the total of recorded assets. What happened to the missing $1.5 trillion? In global statistics, that amount had no owners. For Zucman’s purposes, the anomaly is a revealing one: the amount by which assets exceed liabilities is a measure of wealth hidden in offshore accounts. 

Using some detective skills, Zucman estimates that the effects of offshore evasion are severe, with the cost annually at $200 billion in lost revenues, with the US out about $35 billion.  Zucman’s proposal to address the problem is a far-reaching international registry of ownership, though he is a big fan of our own FATCA and that law’s requirement that foreign banks identify their US clients and disclose them to the IRS. 

At around the same time I read the Sunstein review, I also received via email a report by the American Citizens Abroad that was based on a survey it and researchers at the University of Nevada Reno conducted on Americans abroad.  The survey revealed how overseas Americans believe FATCA should be reformed to address some of its negative consequences. Those consequences include some overseas financial institutions no longer dealing with Americans and among those that still do, higher costs of doing business. 

FATCA, as Sunstein notes, is a blunt tool and to the Americans abroad who are complying or who are small fish, the law imposes heavy costs.  But as the State of the Union reflects, there should be little sympathy for Americans who stash cash and the like in tax havens. Given the extent of the problem that Zucman via Sunstein lays out, I suspect that FATCA will not be going away soon though there are proposals that minimize costs without giving away too much in terms of the law’s effort to bring accounts into the sunshine. 

The issue is politicized. FATCA and the IRS for that matter have been part of the presidential campaign, with Senator Paul for example suing to stop FATCA (see a post in Forbes by Robert Goulder discussing that unusual approach) and Senator Cruz noting that recent laws have contributed to the “weaponization” of the IRS leading to his calls to abolish the agency.

Court Sustains Use of Regular Summons to Appraiser Investigated Even Though Third Party Taxpayers May be Identified (1/14/16)

In Clower v. United States, 2015 U.S. Dist. LEXIS 174254 (N.D. Ga. Dec. 17, 2015), here, the IRS issued a summons to Jim R. Clower, an appraiser, for "documents including, among other things, appraisal work files, documents reflecting customers for whom he prepared appraisals, and correspondence related to appraisals completed for the purpose of valuating real property for conservation or historical easements."  Those who observe the tax scene will recognize that there is a lot of abuse of overvaluation of conservation and historical easements for purposes of claiming charitable deductions.  And, the fatal flaw in many promoted tax schemes/shelters have for many years been grossly inflated valuations.  I infer that the IRS suspected Clower of doing multiple valuations that might require investigation for the possible assertion of penalties against Clower.  See § 6695(a),  Substantial and gross valuation misstatements attributable to incorrect appraisals, here.  The summons in question was clearly addressed to Clower with respect to his potential liability.  The summons was thus a regular IRS summons.

Should Clower respond to the summons, however, he would likely identify the clients for whom he had given appraisals.  In such cases, the IRS may not otherwise know who many of those clients were.  Presumably, the IRS already knew of at least one such client because the IRS had Clower's name.  Normally, if multiple potential taxpayers of an IRS investigation are unknown but identifiable through some common participant in an aggressive scheme (such as shelter promoters or even foreign banks), the IRS can issue a John Doe Summons ("JDS") to that common participant.  See § 7609(f), here.  The JDS requires court approval.  It is far less convenient for agents than issuing a regular summons where the regular summons could produce the same information.  That is apparently what happened in Clower.  The IRS issued the summons to Clower with respect to his potential liability and would thereby discover the identities of taxpayers using his services.  So this overlap of the regular summons and the JDS creates some tension, particularly if the IRS were to use the regular summons to avoid the hassle of the JDS.  As we say in the Saltzman & Book, Tax Practice & Procedure ¶ 12.05[4][b][v] John Doe Summons.(online, viewed 1/14/16) [footnotes in brackets, with links to the cited cases added by JAT]:

The Service sometimes finds that the John Doe Summons procedures slow it down. The Service must first convince DOJ Tax that it is worth seeking the district court's approval of the John Doe Summons. DOJ Tax must gear up and present the matter to an often skeptical and almost always overworked District Court who must play devil's advocate to the government's ex parte application for the summons. Obviously, the Service would much prefer to use its regular administrative summons, which has no such cumbersome steps. 

In United States v. Tiffany Fine Arts, Inc. [469 US 310 (1985), here], the Supreme Court blessed the Service's use of the regular administrative summons rather than the John Doe Summons where the target of the summons was a shelter promoter. The administrative summons was issued with the promoter identified as the taxpayer being investigated, but the information and documents sought could also identify otherwise unknown shelter investors who dealt with the promoter. The Service could then open investigations of the shelter investors. The Supreme Court blessed that gambit and refused to require the John Doe Summons procedure. 

After Tiffany Fine Arts, the Service saw an escape from the annoyances of the John Doe Summons procedures — simply find a reason to audit the third party with information or documents identifying otherwise unidentified taxpayers that arguably were relevant to a tax investigation of the third party. Tiffany Fine Arts says that will work. However, where the allegation of investigation of the third party is merely pretextual to get information about unidentified taxpayers with whom the third party dealt, courts are open to quashing the general administrative summons, thus relegating the Service to the John Doe Summons procedure.[United States v. Gertner, 65 F3d 963 (1st Cir. 1995), here]

Clower appeared to be making the Gertner argument.  The Court identified Clower's arguments as (bold face supplied by JAT:

According to the petition, Clower is a certified general appraiser who has performed independent fee appraisals since 1969. In his petition, Clower avers that the IRS summons violates the requirements of 26 U.S.C. § 7609(b)(2) because (1) it is at least in part a John Doe Summons, n1 and the IRS did not follow the requirements for issuing such a summons; (2) it is a fishing expedition designed to produce evidence [2]  that could expose Clower to penalties and probable prosecution; (3) it fails to specify the projects being investigated or the targets of those investigations; (4) it requires disclosure of sensitive personal and/or privileged documents and information belonging to persons who are not a part of the investigation; and (5) it is unreasonable and irrelevant because it asks for information outside the statute of limitations. Clower avers that the Court has jurisdiction to hear his petition pursuant to 26 U.S.C. § 7609(h)(1).

The first is the relevant one.  The Court dealt cryptically with the argument as follows:

The summons attached to the petition was issued to Jim R. Clower, "In the matter of Jim R. Clower under 26 USC Secs. 6694, 6695, 6700, 6701, 6707 and 6708."  Although Clower contends in his petition and his motion to strike that the summons is a John Doe summons and that it fails to specify the targets of the investigation(s), he has not offered any arguments or evidence to support this or to contradict the plain language of the summons.

Unlike Gertner where the summonsee established to the satisfaction of the district court judge that the IRS was not interested in the liability of the summonsee but just wanted to identify the otherwise unidentified taxpayer.  The facts of Gertner are unusual and anyone wanting to make a Gertner-like argument are well advised to obtain copies of the briefs and submission (including affidavits) in that case..  Of course, the summonsee of the regular summons will not be able to mount the attack in a direct motion to quash but must fail to comply and then assert the Gertner-like argument in a summons enforcement proceeding.

In this regard, the Court does note in footnote 2:

The fact that the summons may serve a "dual purpose" of determining a known taxpayer's liabilities and "discovering information that would aid in identifying unnamed taxpayers and investigating their liabilities" does not make it a John Doe summons subject to the procedures in § 7609(f). See United States v. Gottlieb, 712 F.2d 1363, 1367-68 (11th Cir. 1983) (quoting United States v. Barter Sys., Inc., 694 F.2d 163, 169 (8th Cir. 1982)).

Clower and Tiffany Fine Arts illustrate that, if the IRS has a legitimate reason to investigate the common party and can fashion summonses seeking information and documents relevant to that investigation, the IRS can use the regular summons to, in part, identify third parties for investigation in the same process.

The other claims Clower made were also rejected.  Among the reasons is that the summons was issued to Clower with respect to his liability and the person to whom the summons is issue is not authorized to move to quash under § 7609 which deals with summonses to third parties.  This does not mean that the summonsee identified as being investigated cannot assert appropriate defenses.  It just means that the defenses are asserted in a summons enforcement proceeding initiated by the Government after the summonsee fails to comply.  Noncompliance with the summons will not itself draw sanctions; rather only noncompliance with the district court's enforcement order, if granted, can be sanctioned  Also, the seminal decision in United States v. Powell, 379 U.S. 48 (1964) sustaining the broad scope of the IRS summons, although not cited by the Court, really disposes of the balance of Clower's claims.

The docket entries indicate that Clower appealed on December 25, 2015 (presumably by online filing since I doubt the cleark's office was opened).

Fifth Circuit Reverses Sentencing Court on Conditions of Restitution and Prohibition of Employment (1/14/16)

In United States v. Thody, 2016 U.S. App. LEXIS 298 (5th Cir. 2016) (unpublished), here, the defendant (Thody) was convicted of "multiple counts of tax evasion."  The Fifth Circuit panel holdings seem fairly routine, which is why the decision is unpublished.  Nevertheless, I offer some comments on the opinion.

First, although not further addressed in the opinion, the Court makes this factual statement:

Thody believed he was a "sovereign citizen" not subject to federal law. He therefore believed that the Internal Revenue Code did not require him to pay taxes. 

Did the Court really mean what it said?  Specifically, since a bona fide belief that a defendant does not owe tax is a complete defense to a crime requiring willfulness, as tax evasion surely does, the Court stated a complete defense for Thody.  See Cheek v. United States, 498 U.S. 192, 201 (1991). The Court could have said that Thody claimed that he did not believe the the Internal Revenue Code did not require him to pay tax, but that the jury did not accept that claim and therefore he acted willfully.  But, that is not what the Court said in the quote.  Maybe that is implicit, so maybe I am just too picky.

OK, moving on.

Second, the opinion holds that the sentencing court can stack sentences (make them run consecutively) to achieve the appropriate sentence, whether in the Guidelines range or outside it (here by variance upward, as noted below).  In the case, the court imposed a 90 month sentence comprised of two 45 month sentences for counts one and two (tax evasion counts with aggregate sentences of 60 months each).

Third, the Court reversed the sentencing court's imposition of restitution for the tax crimes convictions.  Restitution is not available for Title 26 convictions except as a condition of some benefit offered the defendant, such as supervised release.  The court remanded to have the district court determine whether to impose restitution as a condition of supervised release.

Fourth, the Court reversed the sentencing court prohibition "from contracting with the Government as a condition of his supervised release."  Although contracting with the Government produced the income involved in the case, the condition here did not meet the criteria as follows (footnote omitted):

A district court has discretion to impose conditions on supervised release, but only if the condition is reasonably related to: the nature and circumstances of the offense, the need to afford adequate deterrence, the need to protect the public from future crimes, and the need to provide treatment to a defendant. Moreover, if a condition is required, it must be imposed to the "minimum extent necessary."

Fifth, the Court held that the sentencing court's upward variance from the Guidelines range was reasonable.  In the course of so holding, the Court said (footnote omitted):

Here, the district court imposed a non-Guideline sentence. The Guidelines, with exceptions not here relevant, require that a sentence on multiple counts run concurrently. In this case, when the district court imposed a ninety-month sentence, by imposing two terms of forty-five months to run consecutively, it varied from the Guidelines recommendation of a forty-one to fifty-one month sentence.

Note that the sentencing court gave a substantial upward Booker variance.  Variances up or down require explanation.  The sentencing court gave a very short explanation.  Here is what the Court of Appeals panel said:

Because it imposed a non-Guidelines sentence, the district court needed to provide a more detailed explanation of its reasoning. The court gave the following reasons: 

the defendant is a person that questions and challenges the jurisdiction of the Court, [and] does not acknowledge the validity of the statute of which he was convicted of. [Therefore][,] [w]ithout an adequate and sufficient sentence, the defendant will not be deterred and will continue his unlawful activities in an identical or similar fashion. 

The district court's reasons adequately explained the basis for Thody's sentence. First, the court explained that Thody's sovereign citizen beliefs caused him to reject  federal law and also reject the notion that it applied to him. Second, because Thody continued to believe that federal taxes were voluntary, the district court explained that an above-guideline sentence was needed to motivate him to pay taxes in the future. Thus, even applying the more burdensome standard of a non-Guideline sentence, under plain error review, the district court gave an adequate explanation.

Updated FAQs for SFOP and SDOP Streamlined Processes (1/13/16)

The IRS has updated the FAQs for the Streamlined Domestic and Streamlined Foreign Offshore Procedures.  The are here:  SFOP FAQs, here, and SDOP FAQs, here.  Both were last reviewed and updated on 1/7/16.

My review indicates that the important items are:

1.  More detail on what the IRS expects from the narrative supporting the certification of nonwillfulness.  (SFOP FAQ 6; SDOP FAQ 13.)  In some cases, the IRS was getting narratives that did not contain enough detail to support the taxpayers' certifcations of nonwillfulness.  Most practitioners regularly working in this area already knew that the narrative had to have sufficient details -- not just conclusory allegations -- to support the certification.  So, for those practitioners, I am not sure that the new FAQs add to what they already knew and implemented in making submissions.  But other practitioners may find the new FAQs helpful, and certainly taxpayers going through the process without representation will get a sense of what the IRS will need to process the certifications.  In sum, the narrative must include "the whole story including favorable and unfavorable facts."  (Bold face supplied by JAT.)  The process is one of persuasion from the facts -- favorable and unfavorable -- and that's where a practitioner regularly engaged in the art of persuasion may be able to add value in the submission.  Also, a tip given to me by an IRS person working in the area -- larger or multiple foreign accounts usually require more explanation than smaller or fewer accounts.  Thus, for example, a single $200,000 account owned directly rather than through an entity would likely not require as much detail supporting the certification as would accounts aggregating $10,000,000 owned by foreign entities.

2.  Process for handling joint returns requiring amendment where the other spouse may not participate by signing the amended returns or joint certification.  (SFOP FAQ 7; SDOP FAQ 14.)  The spouse participating in SFOP and SDOP may submit amended returns with only his or her signature (and not the nonparticipating spouse's signature) if the amended return reports additional tax due.  The submission should explain the inability to obtain the other spouse's signature with a prominent reference to the FAQ in issue.  The IRS will routinely request that the other spouse's signature be obtained, but if the other spouse still will not sign, the participating taxpayer notifies the IRS of this.  However, if the amended return indicates a refund for the year, this procedure is not available.

One Step in Attacking Lack of Transparency in U.S. (1/13/16)

A complaint sometimes made on the comments to blog entries on this blog is that the U.S. attacks tax havens (particularly those that permit U.S. persons to hide money in financial institutions or through trusts, corporations or other entities) while the U.S. permits lack of transparency for foreign persons bringing money into the U.S.  See e.g., Financial Secrecy in the U.S. - A NonTax Example Illustrating the Law Enforcement Problem (11/7/15), here.  The New York Times today has this article:  Louise Story, U.S. Will Track Secret Buyers of Luxury Real Estate (NYT 1/13/16), here.

Of course, there is transparency in U.S. financial institutions because of know your customer rules.  But other forms of wealth, particularly U.S. real estate can be effective ways to hide wealth, ill-gotten or otherwise, from foreign tax administrators and collectors, as well as foreign and U.S. law enforcement with respect to money laundering and other illegal activity.  This is an attempt to address that issue, in part.

Key excerpts from todays NYT article:

Concerned about illicit money flowing into luxury real estate, the Treasury Department said Wednesday that it would begin identifying and tracking secret buyers of high-end properties. 

The initiative will start in two of the nation’s major destinations for global wealth: Manhattan and Miami-Dade County. It will shine a light on the darkest corner of the real estate market: all-cash purchases made by shell companies that often shield purchasers’ identities. 

It is the first time the federal government has required real estate companies to disclose names behind all-cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers. 

The initiative is part of a broader federal effort to increase the focus on money laundering in real estate. Treasury and federal law enforcement officials said they were putting greater resources into investigating luxury real estate sales that involve shell companies like limited liability companies, often known as L.L.C.s; partnerships; and other entities.

Officials said the new government efforts were inspired in part by a series last year in The New York Times that examined the rising use of shell companies as foreign buyers increasingly sought safe havens for their money in the United States. 

The use of shell companies in real estate is legal, and L.L.C.s have a range of uses unrelated to secrecy. But a top Treasury official, Jennifer Shasky Calvery, said her agency had seen instances in which multimillion-dollar homes were being used as safe deposit boxes for ill-gotten gains, in transactions made more opaque by the use of anonymous shell companies. 

“We are concerned about the possibility that dirty money is being put into luxury real estate,” said Ms. Calvery, the director of the Financial Crimes Enforcement Network, the Treasury unit running the initiative. “We think some of the bigger risk is around the least transparent transactions.” 

The department will focus on sales that are both paid for all in cash and conducted using shell companies. The government is requiring title insurance companies, which are involved in virtually all sales, to discover the identities of buyers and submit the information to the Treasury. The government will put the information into a database for law enforcement. 

The Treasury’s program will affect billions of dollars in real estate transactions. In Manhattan, the initiative requires buyers in sales of more than $3 million to be reported; in Miami-Dade County, it requires reporting on sales of more than $1 million. In Manhattan, 1,045 residential sales cost more than $3 million in the second half of 2015, worth some $6.5 billion in aggregate, according to PropertyShark, a real estate data company. 

In addition to starting in only two markets, the requirement runs from March through August. If Treasury officials find that many sales involved suspicious money, Ms. Calvery said, they would develop permanent reporting requirements across the country.

Hawaii Businessman Sentenced to 46 Months (1/7/16)

I have written before on the conviction of Hawaii businessman, Albert S.N. Hee.  See After Guilty Verdict, District Court Denies Motions for Dismissal and New Trial in Tax Crimes Case (Federal Tax Crimes Blog 11/13 /15; 11/15/15), here, and Court Holds that Civil Agent Did Not Continue Investigation Too Long and Even If Deceptive Did Not Prejudice Defendant (Federal Tax Crimes Blog 5/2/15), here.  As I noted in one of the blogs, the jury convicted Hee of one count of tax obstruction, § 7212(a), here, and 6 counts of tax perjury, § 7206(1), here.

DOJ Tax has announced here his sentencing to 46 months in prison.  The actual sentence served will be subject to mitigation under the good time credit (about 15%).

It is not clear what the guidelines calculation was.  It is interesting that, based on a rough and ready guidelines calculation assuming restitution equal to the tax loss (the primary driver of the guidelines calculations), the Base Offense Level would be 18 and, even with some adjustments, it is not likely the offense level for applying the sentencing table was in excess of 23.  An offense level of 23 has a sentencing range of 46-57 months.  So, it is possible that the judge could have given a bottom of the range guidelines sentence.  (Readers will note that there is considerable uncertainty in this calculation, particularly the assumption that the restitution amount equaled the tax loss used in the calculations, and thus the conclusion.)

It is interesting to note that, had he pled rather than go to trial, he could have certainly pled to only one or two felony counts and, assuming 23 was his final offense level as speculated in the prior paragraph, with the acceptance of responsibility 3-level downward adjustment, his offense level would have been 30 with an indicated guidelines range of 33-41 and with a good shot at a Booker downward variance.  (The variance too is speculation but a good acceptance of responsibility often sets the judge up to make a downward variance in tax convictions; again speculating, a plea might have result in a sentence less than half that given after trial.)

The links guidelines tables are:  §2T4.1.Tax Table, here, and 5A Sentencing Table here.