Tuesday, May 10, 2016

Aiding and Assisting Sentence After Extradition from Germany (5/10/16)

I received an email press release dated May 9, 2016 from IRS CI with the following information about a tax sentencing:
A former Orange County resident was sentenced this morning by United States District Court Judge Percy Anderson to a term of imprisonment of one year and one day for providing false and incomplete information to his income tax return preparer. 
Donald M. Baxi, 69, a Canadian citizen formerly residing in Ladera Ranch, was further ordered by Judge Anderson to pay restitution of $56,319. 
Baxi pleaded guilty in March to one count of aiding and abetting in the preparation of a false income tax return.  According to the plea agreement filed in the case, Baxi was responsible for having the partnership income tax returns of Vintages Wine Bar, LLC (“VWB”), prepared and filed with the Internal Revenue Service.  For each of the years 2003, 2004, and 2005, Baxi deliberately provided false and incomplete information to his tax return preparer so that VWB’s interest income would not be reported to the IRS.  During these years however, VWB received interest income from two separate sources totaling $201,142.  This unreported interest income caused a tax loss to the government of $56,319. 
In November 2010, a federal grand jury indicted Baxi on six counts of aiding and assisting in the preparation of false income tax returns.  Upon learning of those charges, Baxi fled the United States. 
Five years after being indicted by a federal grand jury on tax charges, Baxi was arrested by German authorities and extradited back to the United States to face the charges contained in the indictment. 
Baxi was convicted of garden-variety aiding and assisting, Section 7206(2).  See the plea agreement here.  The interesting part is that the inference from the press release is that he chose to flee the country, thereby becoming a fugitive after being indicted. (The facts themselves may be a bit more nuanced as I discuss below.)  His absence from the U.S. led ultimately to his extradition from Germany.  The more surprising part is that, according to the pleadings submitted by the parties, the defendant's alleged flight from the U.S. to avoid trial seems not to have been that significant a factor, if a factor at all.  The U.S. original sentencing position pleading, here, had this cryptic statement in closing:
Finally, it appears to the government that defendant deliberately attempted to avoid arrest in this case, keeping himself out of the country and attempting to remove his name from the INTERPOL watch list. See facts proffered in Government's Request for Detention (Doc. 11). This conduct too supports a sentence of 15 months incarceration.
Fifteen months was a mid-range sentence, with the Guidelines range being 12 to 18 months.

The defendant's sentencing position paper, here, is quite masterful in arguing for the sentence of a year and a day.  Specifically, it presents the travails visited on the defendant while caught up on the German legal system in the extradition process.  Then it addresses his absence from the U.S. in a footnote on p. 6 as follows:
 n3 The government argues that Mr. Baxi attempted to avoid arrest in this case by keeping himself out of the country and attempted to remove his name from the INTERPOL watch list. (See Gov’t Position Paper at p. 4.) This claim is completely unsubstantiated by the email referenced by the government, in which Mr. Baxi simply requests that he be removed from the INTERPOL watch list so that he could “travel freely and accumulate enough funds to mitigate the problem,” namely, what he believed to be a civil, rather than a criminal matter. As the probation office correctly concluded, there is no evidence that Mr. Baxi left the United States after being charged with a criminal offense, therefore, his conduct does not rise to the level of obstruction of justice. (See PSR ¶ 26.)
The position paper worked and the Government in its reply, here, agreed to the sentence of a year and a day.   The Government did not insist on an obstruction of justice enhancement.

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