Prior to the sentencing, the sentencing judge ruled only various post-trial motions, some of which merely restated motions or claims made before or during trial. See Memorandum Order Denying Defendant's Motion for Judgment of Acquittal or, in the Alternative, Motion for New Trial in United States v. Lynch, 2017 U.S. Dist. LEXIS 634 (WD PA 2017), here. The matters dealt with in the Order and the rulings are more or less garden variety, so I won't discuss them here. Rather, I just point out certain matters that caught my eye in the Order.
1. The defendant is described as "a highly skilled tax attorney and sophisticated businessman * * * The evidence at trial fairly established that Lynch possessed superior knowledge of tax and corporate laws which he used to keep Internal Revenue Service ("IRS") agents from being able to collect taxes due for several entities that make up the Iceoplex - - a collection of businesses related to an indoor ice skating rink - - by shifting assets and employees among several entities."
2. The defendant was charged with tax obstruction, § 7212(a), here, in addition to several counts of willful failure to pay over, § 7202. He was acquitted of tax obstruction and some of the willful failure to pay over counts. He was convicted of some of the willful failure to pay over counts.
3. The Court cites as among the evidence from which the jury could have convicted Lynch of the willful failure to pay over the following (bold face supplied by JAT):
• The FBI's interview of Lynch in March of 2011, during which he was notified that he was the subject of a criminal investigation for willful failure to pay employment taxes. Doc. No. 223, p. 216-218. After the FBI interview, Lynch made full, timely payments for three subsequent quarters and substantial partial payments for two more subsequent quarters before failing to make any payment towards the taxes owed for the quarters related to the Counts for which he was convicted. See Doc. No. 201, pp. 44-49.The inference that could be drawn from the FBI interview and subsequent events is, I think, fair. The question I have is why the FBI would have been conducting a tax crimes investigation as seems to be the import of the first sentence. As I have discussed in several blog entries, the ability of the DOJ (including its FBI component) to investigate tax crimes is at least questionable. See DOJ Tax Division Criminal Tax Investigation Authority (Federal Tax Crimes Blog 6/5/09; 12/29/14), here; and Even More on DOJ Authority to Investigate Tax Crimes (Federal Tax Crimes Blog 7/20/10), here. I find that the IRS continues to claim that exclusive investigative authority on its web page titled Financial Investigations - Criminal Investigation, here, where it states: "IRS is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code." I suppose that the FBI's interview could have been incident to a grand jury investigation in which the grand jury could have been investigating other nontax crimes as well, but the opinion does not state that.
4. The Court handily rejects Lynch's claim that he was not the employer, an attempt to limit § 7202 to the employer. However, § 7202, like its civil penalty counterpart, § 6672, here, is not limited to the employer but encompasses anyone who is the person responsible for withholding and paying over.
5. Normally, a defendant in a white collar trial will not promise to testify and then fail to do so. So, the attorney for the defendant will avoid making the promise, but will wait until the last minute to make the decision based on the events up to that point. In this case, Lynch cried foul because, he claimed, the Court forced him to make that promise in front of the jury which he later reneged on by not testifying. Promise may be a strong word here, but his lawyer did identify Lynch as a witness in response to questions from the judge as to witnesses to be called. That is a routine type of question when a judge is trying to anticipate time needs, but the answer before the judge is what caused the problem. The Court rejected the claim as follows;
Defense Counsel had many options that he could have chosen to respond to the Court's questions about the remaining witnesses and the trial schedule: he could have stated that he wanted to discuss the issue outside the presence of the Jury - - as the Government illustrates, Defense Counsel had asked to address matters outside of the Jury's presence at previous times during the trial, see e.g. Doc. No. 223, p. 3; or, he could have stated that he had not yet planned out the next day's witnesses; or, he could have identified Mr. Gavin only (who did not actually testify). Throughout the trial, the Court had routinely asked about the upcoming witnesses so that the Court and the Jury could have some idea about the schedule for the day. See e.g. Doc. No. 224, p. 7. Lynch cannot argue now that he was "forced" by the Court to state that he would testify. Indeed, if, as Lynch now argues, he had not yet decided whether or not to testify, he had no need to reveal himself as an upcoming witness at all. n66. The Court rejected Lynch's claim that the Court's imposed time strictures forced him to forego certain defense strategies. The Court noted the importance of managing a trial to achieve both fairness to the defendant and efficiency. The Court then said:
n6 Any error caused by Lynch's decision to reveal himself as an upcoming witness and then choosing to invoke his right to not testify was cured by the Court's instruction to the Jury. Doc. No. 226 at pp. 79-80.
Despite only using six and one-half hours of the 20 hours he was ultimately permitted, see doc. no. 225, p. 171, Lynch now complains at length that the Court's imposition of trial time limits violated his rights to Due Process and to confront witnesses and receive effective assistance of counsel. Doc. No. 235 pp. 52-58. The Court made it clear throughout the pre-trial and trial proceedings that it would re-evaluate the need for additional time as warranted. See, e.g., Doc. No. 195, p. 7 ("As stated at least twice before, the Court will reconsider the Parties' need for additional time as trial progresses.").
Finally, the Court did not "force" Defendant to enter into stipulations with the Government. The Parties were repeatedly encouraged to stipulate to facts that were not in dispute and to stipulate to the authenticity and admissibility of documents in order to streamline the issues for trial and avoid any needless waste of the Jury's time. The failure of litigants to ensure that jurors are not subjected to duplicative and needless testimony diminishes the quality of trials and is unfair to the civilian-jurors who receive minimal compensation for their valuable service. See United States v. Warner, 506 F.3d 517, 524 (7th Cir. 2007) (citing Gordon Van Kessel, Adversary Excesses in the American Criminal Trial, 67 Notre Dame L. Rev. 403, 478-79 (1992)) ("Exceedingly lengthy trials lead to reduced concentration and recollection of events on the part of all participants, particularly witnesses and jurors. In very long cases, exhaustion may diminish everyone's performance.").
Had Lynch refused to stipulate to a single fact or the admissibility of any documents, the Court could not have and would not have "forced" him to do so. As the Government explains, Lynch has not identified "a single document that the Government introduced that he believed the Government would have been unable to authenticate. On the other hand, but for the parties' stipulation, [Lynch], very likely, would have been unable to admit into evidence many of his documents — and certainly not without calling various document custodians." Doc. No. 241, p. 17.The Court also entered earlier Tentative Findings and Rulings for sentencing, here. Some observations from it.
1. The Court found the tax loss as follows:
The Government argues that the total tax loss is $2,885,898, as stated in the PSIR, including $793,145 for the 16 counts of conviction, $731,314 for the acquitted counts, $825,078 for the matching employer taxes during the indictment period, and $558,382 in additional uncharged tax loss from the post-indictment period.
Given that the Court must only make a reasonable estimate of the tax loss based upon a preponderance of the evidence and that the Court could also consider the unpaid penalties and interest under the guidelines, the Court finds that the calculation of the tax loss in the PSIR is a reasonable estimate of the total tax loss and that a corresponding base offense level of 22 for tax loss greater than $1,500,000 but less than $3,500,000 is appropriate. See U.S.S.G. § 2T4.1 (Tax Table).This is a good reminder that even acquitted and uncharged tax losses may be included in the tax loss for sentencing. The concept is relevant conduct. See SG §1B1.3. Relevant Conduct (Factors that Determine the Guideline Range), here.
2. The court cryptically rejected Lynch's claim for the downward adjustment for acceptance of responsibility. Normally that adjustment is not available for someone who goes to trial and affirmatively asserts innocence. Here, Lynch's defense clearly precluded this downward adjustment.