It's the facts that make this case interesting, but there are three issues of law that color its background: the general rules of tax fraud, the proper tax treatment of money taken by a politician from her campaign fund for personal use, and the effect of taking the Fifth Amendment in civil litigation.I address the first and third issues because they are within the scope of this blog. The discussion of the requirements for fraud are probably familiar to most readers of this blog, but many may not know or fully appreciate the negative inference that may be drawn in a civil case from invoking the Fifth Amendment.
I highly summarize the facts the Court found "interesting," noting at the inception "The silence that shouts out" (see the third issue). The taxpayer in the case was an elected local official with strong political tentacles of the Republican variety. According to the findings, "her coiffure is legendary in Chicagoland." Her late husband was also, so he pled to criminal charges, "prominent Cicero politician who confessed to being a mob bookmaker and pleaded guilty to a federal gambling charge." The taxpayer and her husband abused their positions for reasons of both animus and personal gain. This got the attention of federal prosecutors. So found the Tax Court:
In June 2001 a federal grand jury indicted her and several coconspirators for conspiracy to defraud the Town through a pattern of racketeering via multiple acts of bribery, money laundering, mail and wire fraud, official misconduct, and interstate transportation of stolen property. Her criminal trial lasted about three months, culminating in a conviction on August 23, 2002, on all but one count of the indictment (the criminal tax charge later tried separately). This put an end to her political career, and she was sentenced to eight years in prison. The government then tried her separately on the criminal-tax charges, but the jury hung, and the government decided not to try her again. See Gov't Motion to Dismiss Count 13 of the Above-Captioned Indictment, United States v. Spano, No. 1:01-cr-348 (N.D. Ill. Jan. 31, 2003), ECF No. 494. Ms. Loren-Maltese and the other conspirators appealed their convictions and sentences to the Seventh Circuit, which upheld the convictions but remanded for resentencing. See United States v. Spano, 421 F.3d 599 (7th Cir. 2005). The trial court then upheld the original sentence, and she remained imprisoned until 2010.