Taxpayer: A. Ahuja
Conviction Date: 8/22/12
Sentence Date: 2/1/13
Banks: HSBC in India; also HSBC account in the Bailiwick of Jersey, a British Crown dependency located in the Channel Islands off the coast of Normandy
Enabler: HSBC India representative in New York
Guilt: Jury Conviction
Count(s) of Conviction: Tax Perjury (Section 7206(1))-one count; FBAR-1 count
Maximum Possible Sentence: 8 years.
Omitted Income: $2.7 million for years 2005 through 2009
Tax Loss: Because some key sentencing documents are under seal, it is unclear what tax loss number was determined by the Court. In its Sentencing Memorandum, the Government requested a tax loss finding of $967,944.66 (including (i) the federal tax loss for the 2009 year of conviction and the acquittal years that can be included under the relevant conduct concept and (ii) the state tax loss). In his Sentencing Memorandum, Ahuja requested a tax loss finding of $ -0-, arguing that the Government had not proved by the required preponderance of the evidence that there was any tax loss. I provide links to the submissions below, so those with the interest and time should pull them down to read.
Guidelines Indicated Sentencing Range: Gov't calculation: 41-51 months; Ahuja calculation: -0- months incarceration.
FBAR Penalty: ? [This is a civil penalty not resolved in a criminal case except by agreement of the parties; this is usually handled by plea agreement, but there was no plea agreement here.
Actual Sentence: Incarceration - 0 months; probation 3 years.
Home Detention: 3 months
Court: ED WI
Judge: Charles N. Clevert, Jr. (Wikipedia entry here)
See David Voreacos, Doctor Spared Prison for Tax Violations Tied to HSBC Account (Bloomberg 2/1/13), here.
1. The Government's sentencing submissions were detailed and good, but fairly routine.
2. Ahuja's sentencing submissions were excellent -- both in the Sentencing Guidelines analysis and in elaborating the Booker factors for the lowest possible sentences (seemed to have been achieved). As noted above, the defense argued that the Government had not proved any tax loss. Note that neither count of conviction requires a tax loss as the element of the crime. This may have been the basis for the zero incarceration.
3. Ahuja did make one argument relating to the tax loss that was very, very interesting, since it sought to treat the usual calculation of tax loss as irrelevant. Here is the argument.
Second, this may be the only case in history where an individual was indicted by the federal government for underreporting interest income that resulted in underpayment of taxes by less than two percent of the individual’s total tax liability. Even if the government’s charges are accepted, [defendant's] underpayment of taxes was an extremely small percentage of his total tax liability. The Sentencing Guidelines measure tax loss in dollar amounts. There is no explainable rationale for why dollar amounts are the basis for the offense levels computed under the tax table. If instead the tax table used percentages of unpaid taxes as compared to total tax liability, [defendant] likely would be at an offense level of 6. Indeed, considering tax loss as a percentage or tax liability [*5] instead of dollar amounts is a far more equitable way to determine an appropriate sentence.
Third, [the defendant] has already paid all of the tax he owed, plus late payment penalties and interest, dating back all the way to 2002. When [the defendant] realized that a mistake was made on his tax returns, he did what an honest tax-payer would do and filed amended tax returns. He did this prior to being indicted in this case.
7. It will be interesting to see if the Government appeals. If indeed the Court found no tax loss and the record supports that finding (i.e., the Government failed to make the proof), then the sentence is probably bullet-proof.
Ahuja Sentencing Documents:
Ahuja's Response to Government Sentencing Memo (1/23/13), here
Government Sentencing Memo (1/22/13), here.
Brief for Ahuja (1/22/13), here.
Judgment (Imposition of Sentence) (2/1/13), here.
Docket Entries as of 2/13/12, here. [Note some key sentencing documents are sealed]