I was speaking today with someone writing on the Warner saga. I cited to him the role of sentencing in tax crimes, citing the opening commentary to Chapter Two, Part T.1, of the Sentencing Guidelines, here, and the Fourth Circuit case of United States v. Engle, 592 F.3d 495 (4th Cir. 2009), here. So, I offer them to the readers:
Chapter Two Part T of the Sentencing Guidelines opens as follows:
The criminal tax laws are designed to protect the public interest in preserving the integrity of the nation's tax system. Criminal tax prosecutions serve to punish the violator and promote respect for the tax laws. Because of the limited number of criminal tax prosecutions relative to the estimated incidence of such violations, deterring others from violating the tax laws is a primary consideration underlying these guidelines. Recognition that the sentence for a criminal tax case will be commensurate with the gravity of the offense should act as a deterrent to would-be violators.Now, on the Engle case. I have previously blogged on the Engle case and will just link to that discussion here. Fourth Circuit Cites S.G. Tax Sentencing Policy in Reversing Sentencing Variance (1/16/10), here. For present purposes, just know that the Fourth Circuit took the rare step -- rare under the Booker regime -- of reversing and remanding a sentence.
As in Warner, Engle was a government appeal from a Booker sentencing variance. According to the Fourth Circuit opinion, Engle evaded tax of more than $600,000 (the opinion says that the total with penalties and interest exceeded $2 million, but penalties and interest are not considered tax loss for sentencing purposes). With the benefit of his guilty plea, Engle's total offense level was 17; so the Guidelines sentencing range was 24-30 months. (This was after a reduction of his Criminal History from II to I.)
Engle's sentencing saga is a story in itself, I won't get into the details here, but the Government wanted a sentence in the advisory guidelines range. The sentencing judge, however, was concerned that any sentence of incarceration would prevent Engle from continuing his business and thus prevent him from paying the unpaid tax, penalties and interest. The sentencing judge thought that permitting Engle to work and pay those amounts would meet the deterrent needs for sentencing. So, the sentencing judge sentenced to "fours years probation, 18 months house arrest on electronic monitoring with work release, and he will be permitted to make trips to China as demanded by his employer." The Government appealed.
Based in significant part on the policy in the Introductory Comment quoted above, the Court of Appeals reversed and remanded for resentencing. On remand, the sentencing judge sentenced Engle to 60 months incarceration. See Criminal Case No. 3:04cr55-FDW-DCK-1, Doc. No. 43: Amended Judgment), as referenced in Engle v. United States, 2014 U.S. Dist. LEXIS 8298 (WD NC 2014) (a Section 2255 proceeding). According to the Court of Appeals' opinion, Engle's Guideline range was 24-30 months, so it would appear that the sentence was an upward variance, rare in tax cases.
It is often hard to compare sentencing factors from one defendant to another. However, to the extent one can compare Warner and Engle, I offer the following observations: (i) if Engle's original sentencing deserved reversal and remand, then so should Warner's; and (ii) if there is a remand, Warner might be concerned about a sentence in the Guidelines range -- which was 46-57 months. See the plea agreement quoted and linked in a prior blog: Ty Warner, Beanie Babies Creator, Pleads Guilty (Federal Tax Crimes Blog 10/2/13; Updated 10/5/13), here.
Key previous blog entries in chronological order:
- Whopping FBAR Penalty in Criminal Plea; Beanie Baby Creator Gets Beaned With No Free Pass (Federal Tax Crimes Blog 9/18/13), here.
- Ty Warner, Beanie Babies Creator, Pleads Guilty (Federal Tax Crimes Blog 10/2/13; Updated 10/5/13), here.
- The Beanie Baby Man, The Tax Evader Adult Man, Ty Warner, Gets Probation! (Federal Tax Crimes Blog 1/14/14; Updated 1/18/14), here.
- Wow! Ty Warner is Not Quite the Innocent Abroad (Federal Tax Crimes Blog 2/24/14), here.
- When is Booker Variance Too Much? Per DOJ, Certainly in the Ty Warner Case (Federal Tax Crimes Blog 5/12/14), here.
- Booker Variances are More Common in Tax Crimes. Why? And Do They Disproportionately Benefit the Rich? (Federal Tax Crimes Blog 5/16/14), here.
- Sentencing Tales Told in Spreadsheets (Federal Tax Crimes Blog 6/28/14), here.
- Ty Warner Appellee Brief on Sentencing Appeal (Federal Tax Crimes Blog 7/28/14), here.