Tax Counts of Conviction Drive the Bribery Sentence (2/2/13)

In United States v. Heard, 709 F.3d 413 (5th Cir. 2013), here, the defendant Heard was charged with bribery-related counts and with certain tax crimes.  The tax charges (Klein conspiracy (18 USC § 371) and tax evasion (§ 7201) were as follows:

The Government alleged that over the course of eighteen years, Heard, Lambert, and other defendants conspired to defraud the United States out of millions of dollars in employment taxes withheld by Heard's security companies. Overall, the Government alleges that the companies failed to pay a substantial sum in employment taxes, totaling over $5 million. According to the Government, the conspirators opened and closed all of these corporations, changed company names, moved physical locations, used different versions of the company names, signed documents with fictitious names, and used mail drops to prevent the IRS from discovering the individuals operating these companies and collecting the unpaid employment taxes. On appeal, neither Heard nor Lambert challenges the existence of a conspiracy to defraud the United States. 

The Government presented evidence that Heard diverted funds from his corporations to finance his lavish lifestyle, including purchasing a steer at the Houston Livestock Show and Rodeo. There was evidence that Heard had his employees cash corporate checks, often signed using a stamp with a fictitious name made in the course of the conspiracy, and give the money to him. This behavior formed the basis of the two tax evasion charges. The Government put on evidence that Heard failed to report distributions from SPI in 2001 and 2003. The Government has noted evidence that Heard filed false tax returns in other years as well.

The opinion does not describe the other tax charges for which he was convicted -- tax perjury (Section 7206(1)) or for tax obstruction (Section 7212(a)), apparently because none of the tax convictions were contested on appeal.

The principal issue on appeal was the bribery of a public official.  I do not address bribery and focus instead on some tax issues related to Heard's sentencing.

First, Heard objected to the two-level increase to the base offense level for failure to report illegal income.  See Guidelines § 2T1.1(b)(1).  The Court rejected the argument on the basis that Heard's failure to pay over the tax to the IRS permitted the corporation to make the distributions that constituted the income in question.

Second, Heard then objected to the reasonableness of the sentence.  The sentence was 151 months.  That sentence was based on the bribery count (which permitted a maximum of 15 years, but as noted below the Guideline calculation was driven by the tax counts of conviction):

The district court calculated the advisory Guidelines range to be 151-188 months of imprisonment, and the court imposed a sentence of 151 months of imprisonment for the conviction of aiding and abetting bribery of a public official. The district court also imposed statutory maximum sentences of 60 months for conspiracy to defraud the United States, 60 months for each of the two tax evasion counts, 36 months for the count of willfully making and subscribing to a false tax return, and 36 months for corrupt interference with internal revenue laws, all to run concurrently with the 151-month sentence. The bribery conviction carried a 15-year maximum term of imprisonment (180 months).

Although Heard was sentenced for the bribery offense (which had a greater statutory maximum sentence of 15 years), the Guideline calculation was determined by the offense level for the tax offenses for which he was convicted because they produced a significantly greater offense level than did the bribery offenses.  The Court explained (some footnotes omitted):

The district court correctly calculated the advisory Guidelines range to be 151-188 months of imprisonment, as Heard concedes. The offense level for the tax counts was 34, which combined with his criminal history,  [*23] resulted in the 151-188 months advisory range. The offense level for the bribery count was 14. The Guidelines provide in § 3D1.4 that if the offense level for one group of related counts is more than 9 levels lower than that of the group with the highest offense level, the lower offense level will have no effect on the calculation of the combined offense level. n37 Accordingly, the bribery count did not affect the computation of the 151-188 month range. From this properly calculated range, the district court then selected a 151-month sentence as the total punishment after considering the factors in 18 U.S.C. § 3553(a). n38
  n37 U.S. Sentencing Guidelines Manual § 3D1.4(c) (2010).
  n38 See id. § 5G1.2 cmt. n.1 ("The combined length of the sentences ('total punishment') is determined by the court after determining the adjusted combined offense level and the Criminal History Category and determining the defendant's guideline range . . . ."). 

In subsequently imposing a 151-month sentence for the bribery count, the district court adhered to the sentencing procedure contemplated by § 5G1.2 of the Guidelines. Section 5G1.2 provides that when there are multiple counts of conviction, the sentence imposed on each count shall be equal to the total punishment, in this case 151 months, unless a count is subject to a statutory maximum or minimum sentence.39 That section further provides that "[i]f the sentence imposed on the count carrying the highest statutory maximum is adequate to achieve the total punishment, then the sentences on all counts shall run concurrently." That is precisely what occurred in this case since the statutory maximum for the bribery count was 180 months of imprisonment. However, even if there had been no bribery count, the district court was authorized to order consecutive sentences on the other counts up to the total punishment of 151 months of imprisonment. In short, the district court committed no error, let alone plain error, in sentencing Heard to 151-months in prison, with or without the bribery conviction. Heard does not discuss or even cite § 5G1.2 of the Guidelines.

There were other holdings in the case, but the following one caught my eye.  The other defendant, Lambert, argued that "his Confrontation Clause rights were violated when the district court refused to allow him to cross-examine an IRS revenue agent about the agent's dismissal, which was converted to a suspension of approximately five months without pay, for viewing pornography on his computer during business hours."  I won't get into the Court's analysis, but bottom line it rejected the argument.