More on Light Sentencing for Offshore Account Tax Crimes (3/5/15)

I wrote yesterday on an offshore conviction (Another UBS Client Sentenced Lightly (Federal Tax Crimes 3/4/15), here).  I commented that offshore tax crimes get punished lighter than ordinary tax crimes.  Today, I was going through some cases I had shelved and found one recent case that offers a contrast.

In United States v. Jones, ___  F.3d ___, 2015 U.S. App. LEXIS 3263 (8th Cir. 2015), here. the defendant was an ordinary tax cheat convicted under Section 7201, here, of evasion of payment.  Owing tax, he took numerous acts to avoid the IRS learning of and seizing his assets to pay the tax liability.  He was indicted for tax evasion.  He pled guilty.  His base offense level was 20 which means that the tax loss was more than $400,000.  See SG §2T4.1. Tax Table, here.   He received the sophisticated means 2 level increase.  See SG §2T1.1.(b)(2), here.  He then received the 3 level reduction for acceptance of responsibility.  See SG §3E1.1, here.   His offense level for the range calculations in the SG 5, Part A, here, was 19, producing a sentencing range of 30-37 months.  The sentencing judge used his Booker variance discretion to vary downward to 24 months imprisonment.  That sentence is 80% of the bottom of the Guidelines range.

Yesterday, I blogged on the sentencing of Gregg A. Kaminsky, an offshore tax evader.  Another UBS Client Sentenced Lightly (Federal Tax Crimes 3/4/15), here.  Although, I have not reviewed the underlying sentencing documents, I can construct his Guidelines calculations from the press release. Prior to doing so, I note that he pled guilty to an FBAR crime but the FBAR crime related to tax evasion.  Hence, his Sentencing Guideline calculations were apparently determined under the tax Guidelines.  I am not sure that this is correct for FBAR violations, but that seems to be the mainstream way of calculating the Guidelines for FBAR violations.  According to the press release, the tax loss was approximately $125,000, thus making his base offense level 16 under §2T4.1, here.  He would be subject to the sophisticated means enhancement under SG §2T1.1.(b)(2), here,  thus making  his offense level 18.  He would then qualify for the acceptance of responsibility 3 level reduction.  See SG §3E1.1, here.  His offense level for the sentencing table was thus 15, making his Guidelines range 18-24 months.  See SG 5, Part A, here.  The sentencing judge sentenced Kaminsky to 4 months in prison.  That sentence is about 22% of the bottom of the Guidelines range.

I am not sure that the conduct each undertook to effect their objective of tax evasion is materially different to explain the differences in their sentences.  Both behaved very badly.  Yet, the offshore tax evader got a relatively lighter sentence compare to their respect Guidelines ranges.

Many offshore violators receive no incarceration.  One explanation for some of the light sentences could be demographics.  Persons who amass the type of wealth that is likely to draw prosecutorial discretion to prosecute are older and thus not ideal candidates for incarceration.  See also §5H1.1. Age (Policy Statement), here, providing that " may be relevant in determining whether a departure is warranted, if considerations based on age, individually or in combination with other offender characteristics, are present to an unusual degree and distinguish the case from the typical cases covered by the guidelines."  Since age is recognized for potential departure in the Guidelines, I am sure it is considered also in exercise Booker discretion.  But, of course, that does not explain Kaminsky's light sentence and its seeming discrepancy compared to Jones' relatively heavier sentence.

Finally, these two instances are anecdotal.  Standing alone, they are not the basis for conclusions as to the universe of tax crimes sentenced.  Nevertheless, there is sufficient data from which a fair inference can be drawn that offshore tax cheating  is the preferred tax cheating based on sentences imposed.  (See my spreadsheet here which is long overdue for an update.)  Lighter sentencing for offshore tax crimes is the fact.  I ask whether that is right.

Another Contributing Factor to Low Sentences -- Age (11/14/13)

This past week I participated on a panel for the California State Bar titled Hot Topics in Criminal Tax Matters.  The panelists were Robert Horwitz, Tom Moore (AUSA San Francisco), Richard Pietrofeso (IRS Laguna Niguel), Steven Toscher (Hochman, Salkin, Rettig, Toscher & Perez, P.C. Beverly Hills,) and myself.  One issue that came up was the general recognition that offshore account sentences seem light relative to nonoffshore account sentences.  I have previoiusly blogged on this subject.  See Sentencing Leniency for Offshore Tax Cheats (Federal Tax Crimes Blog 11/3/13), here, and  Lower Sentences For Offshore Tax Cheats - Role of 5K1 Departures (Federal Tax Crimes Blog 9/28/13), here.  One of the participants at the conference, Richard Pietrofeso suggested another contributing factor -- age.  A Tax Notes article of the panel discussion reports (Kristen A. Parillo, Government Views Offshore Account Crackdown as a Success Despite Few Jail Sentences, 2013 TNT 218-4 (11/12/13)):

Richard Pietrofeso, area counsel (Laguna Niguel), IRS Criminal Investigation division, surmised that the jail sentences have been low because many of the offshore account holders were elderly and some had accounts that traced back to the Holocaust.

His point was that the demographics of the population of the more egregious offshore offenders -- the ones who are prosecuted -- are probably skewed toward older defendants who have had the opportunity to accumulate more wealth and therefore have the larger offshore accounts.  When those defendants are prosecuted, a sentencing judge might well consider advanced age in sentencing, particularly with respect to departures under the Guidelines and variences under Booker.

The Sentencing Guidelines has a policy statement related to age:

§5H1.1.     Age (Policy Statement)
Age (including youth) may be relevant in determining whether a departure is warranted, if considerations based on age, individually or in combination with other offender characteristics, are present to an unusual degree and distinguish the case from the typical cases covered by the guidelines.  Age may be a reason to depart downward in a case in which the defendant is elderly and infirm and where a form of punishment such as home confinement might be equally efficient as and less costly than incarceration.  Physical condition, which may be related to age, is addressed at §5H1.4 (Physical Condition, Including Drug or Alcohol Dependence or Abuse; Gambling Addiction).

 According to my data in the spreadsheet (admittedly not complete as to age, but probably fairly representative), the average age at conviction for taxpayers is 70 years old, with 84 years old being the oldest.

Age and Sentencing -- On the Rara Avis (7/11/12)

One of the issues presented in sentencing of older defendants is whether a sentence stated in years can effectively be a life sentence.  Judge Posner of the Seventh Circuit authored an interesting discussion of this issue in United States v. Johnson, 685 F.3d 660 (7th Cir. 2012), here,

The defendant was 70 years old at sentencing for counts of convictions for controlled substances and possession of an unregistered firearm.  On appeal, the defendant's lawyer filed an Anders brief, "seeking leave to withdraw on the ground that he can't find a colorable ground for an appeal."  Judge Posner found one issue that he wanted to discuss:

The only possible such ground is the judge's decision not to give a below-guidelines sentence despite the defendant's age, a question discussed at length at the sentencing hearing, where his lawyer argued that the defendant should get a shorter sentence than 78 months (six and a half years) because he is (or rather was, at sentencing) 70 years old (he is now 71) and so might die before he was released from prison. The judge consulted the Census Bureau's life-expectancy table and found that the life expectancy of a black male aged 70 is 12.4 years. So even without any time off for good behavior, which would reduce his time served by a maximum of 10 months and thus to 5 years and 8 months, the defendant's sentence does not exceed his life expectancy.

Under the facts, therefore, there was no indication that the sentencing nominated in years would in fact be a life sentence.  But, the facts did suggest to Judge Posner "two questions: the bearing of old age on sentencing, and the bearing of life expectancy on sentencing."