In United States v. Chollet, ___ F.4th ___ (4th Cir. 2026), CA4 here and GS here, the 4th Circuit panel (Judges Niemeyer, Thacker, and Rushing) affirmed the conviction of three defendants, specifically rejecting various points that I discuss below.
The defendants were convicted of a variant of a marketed bullshit tax shelter. Two of the defendants—Kohn and his daughter Chollet—were tax lawyers; the third defendant was an insurance broker. I will not get into the specifics of the shams they created for their clients to (i) improperly hide their clients' income and resulting tax liabilities from the IRS and (ii) to make money for themselves as they shared in the false tax savings the taxpayers (clients) claimed. Suffice it to say that the scheme involved meaningless (i) limited partnerships, (ii) fake charitable contributions, (iii) fake royalties and management fees, and (iv) supposed life insurance policies.
Like all bullshit tax shelters and some bogus tax shelters that avoid the bullshit categorization, they work if they are not audited or otherwise discovered in the tax enforcement system. These tax enforcement system discovered and prosecuted these defendants. Most often, such scams result, if discovered, in civil tax and perhaps civil penalties. But, for some reason this one turned criminal. (I dare say that many similar bullshit tax shelters escape tax enforcement scrutiny and therefore “work” because of inadequate enforcement resources; for which I make an editorial comment: more enforcement resources would pay for themselves in multiples and promote fairness in and respect for the system.)
The counts of conviction are described as follows (Slip Op. 5-6]:
After a two-week trial, the jury convicted all three defendants of conspiracy to defraud the federal government, in violation of 18 U.S.C. § 371; Kohn on 16 counts of assisting in the filing of false tax returns, in violation of 26 U.S.C. § 7206(2); Chollet on 13 counts of assisting in the filing of false returns, in violation of § 7206(2); and Simmons on 11 counts of assisting in the filing of false returns, in violation of § 7206(2), and on 5 counts of filing false tax returns, in violation of § 7206(1).
Some of the defendants’ arguments on appeal are of the “Hail Mary” procedural footfault genre. (The best recent example of that genre is the commotion plaguing the IRS and the courts about § 6751(b)’s written manager approval for penalties requirement as courts have flailed around trying to interpret and apply nonsensical statutory text. See e.g., Tax Court Rejects Various Hail Mary Claim, Including APA Claims, to Get Out of Penalty Free (10/8/25), here).