Wednesday, February 2, 2011

Walter Anderson -- The Fight Continues (2/2/11)

The Walter Anderson saga continues with a decision by the Court of Appeals for the District of Columbia Circuit United States v. Anderson, 2011 U.S. App. LEXIS 1651 (D.C. Cir. 1/25/11). Those wanting some discussion of the saga might do a Google search; my quick search turned up thousands of items, including the following two: the Wikipedia entry here and the JusticeforWalt entry here. (Those wanting a less biased discussion might focus on the Wikipedia entry.) For present context, his case was one of the largest tax crimes case (in terms of tax loss) ever, and perhaps the largest individual tax crimes case. (Some of the marketed tax shelter criminal cases involved more tax loss because more taxpayers were involved.)

At any rate, the new decision arises from his prior conviction. The conviction was affirmed but remanded. United States v. Anderson,543 F.3d 1072 (D.C. Cir. 2008). In part here relevant, the earlier opinion permitted plea agreement restitution even though (i) the plea agreement cited the wrong Title 18 section, a phenomenon the Government urged and the court held was a scrivener’s error that did not vitiate the parties’ meeting of the minds to agree to restitution; and (ii) the plea agreement did not state an amount for restitution.

By the time of the remand, the IRS and the hapless Mr. Anderson were duking it out in the Tax Court over his tax liabilities. On remand on the restitution issue, the sentencing court "ordered restitution for the federal convictions in an amount to be determined by the Tax Court in an ongoing proceeding." I had not seen that type of contingent restitution order, and thought it was worth noting.  I do note that, presumably the restitution so referenced might include amounts in excess of the criminal tax numbers.

On this round of Appeal, Mr. Anderson apparently wanted to reduce his restitution (not yet determined in amount, as noted above) to extrapolate from IRS concessions for certain years in the Tax Court to a complete victory for all years in the Tax Court (even the remaining undecided years). He packaged the argument in three subsets (collateral estoppel, last in time rule, and rule of judicial admissions. Of course, the arguments failed.

Addendum on 3/30/11:  By decision document dated 3/7/11, the Tax Court determined deficiencies and fraud penalties (75%) in the aggregate amount of $247,482,114 for the years 1998 and 1999.  Interest on those amounts would double it (my rough and ready interest calculation shows aggregate interest on those amounts of $248,962,929 calculated through 3/7/11, and of course interest continues until paid).


  1. This is interesting and I got a little too interested in it....

    I have a question from the WIKI explanation: why did the messed up procedural point on the criminal end, affect the civil tax case so that the Tax Court threw out some years? Surely the civil case was separate and distinct?

    Thanks in anticipation

  2. Paddy C,

    I am not sure why the IRS conceded 1995-1997 (but I do speculate below). By way of background from the various opinions written in the case, I gather the following:

    1. Anderson pled to two counts of evasion for the years 1998 and 1999. Earlier years had been involved in the dismissed counts.

    2. At sentencing, the Government introduced evidence of tax loss only of $140,587,613 for 1998 and 1999. It apparently did not attempt to sweep earlier years in under the relevant conduct provision of the Guidelines.

    3. There was a detour to the court of appeals over whether the sentencing court could impose restitution because of a snafu in drafting the plea agreement, but the court of appeals said that restitution could be imposed.

    4. Then, when it went back down for rehearing for restitution, the district court punted to the Tax Court to determine the restitution, as I noted in my blog.

    I speculate that, perhaps, the Government's decision not to try to prove loss for 1995-1997 in the criminal sentencing phase might have meant that it could not meet the rather more likely than not sentencing burden of proof. If that is the case, then in the Tax Court case the Government might have felt it could not prove fraud by clear and convincing evidence for the criminally dismissed years of 1995-1997. That is just speculation and don't know if that helps.

  3. Thanks Jack, that helps.

    Seems like a comedy of errors from the government side! Tax Court personnel must have been shaking their heads.

    Many thanks again.


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