Thursday, January 31, 2013

Plea to Tax Obstruction in Evasion of Payment Case (1/31/13)

I cut and paste this IRS news release principally for the benefit of students just being introduced to federal tax crimes.  First, the press release illustrates that the criminal enforcement system seeks to undergird the federal tax system by publicizing compliance initiatives that will encourage other taxpayers to voluntarily comply.  The IRS thus issues press releases for criminal actions.  DOJ Tax and U.S. Attorneys Offices issue press releases as well.  I often refer to the DOJ Tax and USAO press releases and have links to the right of the blogs to DOJ Tax's press release sites.  Second, this particular plea illustrates a matter we covered last week in the Federal Tax Crimes class at UH Law School.  We were covering tax evasion.  Tax evasion under Section 7201, here, is usually evasion of assessment (principally by false return underreporting tax liability), but sometimes by evasion of payment.  The case described in the press release below seems to fit the pattern of an an evasion of payment case, although the charge was not tax evasion.  The pattern for evasion of payment that we discussed in class was for a taxpayer to have unpaid assessed tax liabilities (often reported by him or set up on audit) that he avoids paying and takes affirmative steps to avoid paying.  That appears to be what this defendant did.

We have also noted in class that a pattern of conduct can often fit within the elements of two or more crimes.  Here, the pattern of conduct could have been charged as evasion of payment but was charged as tax obstruction, Section 7212(a), here.  This was a plea deal and perhaps the "lesser" crime of tax obstruction is what the defendant required in order to plea.  Facially, it is a lesser crime than tax evasion.  Tax evasion is a five year maximum sentence, whereas tax obstruction is a three year maximum sentence.  Given the amount of the tax loss ($1.7 million), it is possible that the three year count of conviction could be less than at least the top of the sentencing guideline range.  I did a fairly clean calculation of the guidelines range (only factors were the tax loss and the 3-level reduction for acceptance) and determined an indicated guidelines range of 30-37 months, so the maximum period allowed by a Section 7212(a) plea will cap the sentence at 36 months.  And this is true not only as to the guidelines range, but also as to any possibility of an upward Booker variance.  Some of the foregoing will be unintelligible to students in the early part of the course, but will be easily understood once we complete the Guidelines chapter.

NEWS RELEASE
Internal Revenue Service - Criminal Investigation
Los Angeles Field Office
N. Dawn Mertz, Acting Special Agent in Charge

For Immediate Release:  January 31, 2013

Prepared by: Special Agent Linda Lowery, Public Information Officer
Office: (213) 576-3252
Mobile: (213) 305-9859
Email: linda.lowery@ci.irs.gov

Beverly Hills Real Estate Agent Pleads Guilty to Obstructing the IRS

Defendant owes over $1.7 million in back taxes to the IRS

Los Angeles – A Beverly Hills commercial real estate agent pleaded guilty today to preventing the Internal Revenue Service from collecting over $1.7 million in back taxes.

Robert Charles Le Moine, 63, of Beverly Hills pleaded guilty before United States District Court Judge James V. Selna to one count of obstructing the IRS.

According to the plea agreement, from about 1990 through 2009, Le Moine was a real estate agent based in Beverly Hills engaged in representing buyers in the purchase of commercial properties.  During that 20 year time period, Le Moine filed personal income tax returns reporting substantial amounts of income, averaging approximately $250,000 in adjusted gross income each year.  Le Moine made estimated tax payments and voluntary payments totaling $166,905 over two decades.  However, Le Moine did not pay the overwhelming portion of taxes due and owing to the IRS.  As a result, Le Moine’s tax obligation to the IRS is approximately $1,704,728, plus penalties and interest.

The IRS began collection efforts in 1999 and made numerous attempts to collect Le Moine’s tax liability and levy his income and assets.  However, the IRS’ efforts were unsuccessful due to the defendant actively impeding the collection efforts.  Le Moine received as income commission checks in substantial amounts, sometimes as high as several hundred thousand dollars from his real estate business.  However, as soon as the checks were deposited to his personal bank account, or shortly thereafter, Le Moine withdrew the money by cash or a check payable to cash, himself, his children or his friends.

Le Moine also dealt extensively in cash and did not purchase or acquire property or large attachable assets that the IRS could seize, and instead rented an apartment or house and leased cars.

As a result of today’s guilty plea, Le Moine faces a statutory maximum sentence of three years imprisonment and a fine of at least $250,000.  In addition, Le Moine may be ordered by the court to pay the IRS back taxes of approximately $1,704,728 plus penalties and interest.  Judge Selna ordered Le Moine to appear for sentencing on June 3, 2013.

The investigation and prosecution of Le Moine was conducted by IRS-Criminal Investigation’s Los Angeles Field Office, in conjunction with the United States Attorney’s Office for the Central District of California.

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United States Attorney’s Office contact:

Assistant United States Attorney
Steven M. Arkow
(213) 894-6975

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