Tuesday, January 17, 2017

Congressional Staffer Achieves Booker Downward Variance for Failure to File That Could Have Been Charged as Evasion (1/17/17;11/20/17)

I previously reported that a congressional aide, Issac Lanier Avant, had been charged with 5 counts of failure to file income tax returns, in violation of § 7203, here.  Congressional Staffer Charged with Failure to File (Federal Tax Crimes 8/25/16), here.  Failure to file is a misdemeanor offense, permitting a maximum sentence of 1 year per count.  Since then, Avant pled guilty to 1 count of failure to file.  See DOJ Press Release of 11/16/16, here.  The plea to a single count meant that, since § 7203's maximum incarceration period for a single count is 1 year, his sentence could not exceed one year.  The other counts were dropped.  Today, according to a DOJ press release, here, Avant was sentenced to "a prison term of approximately 4 months, consisting of 30 days incarceration, followed by incarceration every weekend for 12 months."

JAT Comments:  Before I get into the comments, I caveat that I have not scoured the record to see if publicly available information on Pacer would explain the sentence.  I therefore work off the DOJ press releases and the indictment linked in my original blog on the indictment.  So, with that caveat, here is what I offer.

1.  The Guidelines calculations seem to be as follows:
Base offense level for a tax loss of $153,122 - 16
Less: Acceptance of responsibility - (3)
Offense level for sentencing table - 15
Indicated Guidelines Range - 12-18 months.
Based on these calculations, it appears that the judge gave a significant downward variance (1/3 of the Guidelines range bottom) under the discretion allowed by Booker.  Nothing particularly notable on the bare fact of a downward Booker variance in a tax sentencing.  It is worth noting that, by pleading to a single count, the parties precluded the judge from imposing any sentence above the bottom of the Guidelines range.

2.  Perhaps more significant is the substantial charging break that Avant achieved.  Avant did not just fail to file his returns, he also filed a false W-4 with his employer to exempt himself from tax, thus avoiding withholding.  This is a frequent gambit for persons who try to evade tax, often in the guise of protestor positions.  In United States v. King, 126 F.3d 987 (7th Cir. 1997), here, the defendant filed false W-4's claiming too many exemptions.  He was convicted of tax evasion.  DOJ's CTM states that case where the taxpayer fails to file tax returns can be prosecuted as evasion (a five-year felony per count) where the taxpayer files a false W-4.  DOJ CTM 8.06[1] Attempt To Evade Assessment, here, provides:
Courts have uniformly held that the filing of a false Form W-4 may constitute an affirmative act of evasion. See United States v. DiPetto, 936 F.2d 96, 97 (2d Cir. 1991) (filing and maintaining false Forms W-4 constituted affirmative acts of evasion); United States v. Williams, 928 F.2d 145, 148-49 (5th Cir. 1991) (maintenance of fraudulent Form W-4); United States v. Waldeck, 909 F.2d 555, 560 (1st Cir. 1990); United States v. Connor, 898 F.2d 942, 944-45 (3d Cir. 1990); United States v. Copeland, 786 F.2d 768, 770-71 (7th Cir. 1985); United States v. King, 126 F.3d 987, 990 (7th Cir.1997). Moreover, a false W-4 filed prior to the prosecution years may constitute an affirmative act in each year that it is maintained, because the taxpayer is under a continuing obligation to correct intentional misrepresentations on the form. See Williams, 928 F.2d at 149 (defendant properly convicted of tax evasion for years 1983-85 where false Form W-4 claiming 50 exemptions was filed in 1983 and remained in effect through the prosecution years); United States v. King, 126 F.3d 987, 990-93 (7th Cir. 1997); DiPetto, 936 F.2d at 97.
The U.S. Attorneys manual 9-27.300 - Selecting Charges—Charging Most Serious Offenses, here, provides:
[O]nce the decision to prosecute has been made, the attorney for the government should charge, or should recommend that the grand jury charge, the most serious offense that is consistent with the nature of the defendant's conduct, and that is likely to result in a sustainable conviction. 
Similarly, DOJ CTM 1.01[3] Selection of Charges, here:
The exercise of prosecutorial discretion in criminal tax cases should be guided by the standards applicable to all criminal prosecutions handled by the Department of Justice. See United States Attorneys’ Manual (USAM) § 9-27.000, et seq. The Tax Division therefore should authorize prosecution for the most serious readily provable offense. See USAM § 9-27.300. 
On the facts recounted in the DOJ Tax press releases, it appears the the most serious charge for the conduct was evasion.  The press releases do not explain the charging decision for the lesser offense of failure to file.

Of course, had Avant been charged with evasion and pled to one count of evasion, (a) his sentencing guidelines calculations would be the same as indicated in paragraph 1 and (c) the judge could have given the same downward variance in any event.  But, it does seem that, on the facts stated in the DOJ Press Releases, the criminal conduct was evasion.

Finally, my anecdotal experience from practice is that, where DOJ Tax has a choice of a felony charge and a misdemeanor charge, it will charge the felony.  There are various policy reasons for that choice to charge the felony.  But I have futilely argued with prosecutors to charge multiple misdemeanor counts (such as failure to file) rather than the felony from the same pattern of conduct that will permit the same guidelines sentencing calculations and thus, likely, the same sentence even with Booker discretion regardless of whether the charges are felony or misdemeanor.  At least for in my experience, that argument / plea (as in begging) was ignored and the felony charges made.

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