Tax Attorney Sentenced to Two Years for Evasion and Obstruction (10/16/17)

USAO SDNY announced here the sentencing of a tax attorney, Harold Levine, to two years imprisonment for counts of tax evasion and tax obstruction to which he pled.  I previously wrote on denial of his earlier motion to dismiss.  Court Denies Motion to Dismiss Counts Against Tax Shelter Lawyer (Federal Tax Crimes Blog 4/14/17), here.  The following are the key excerpts from the USAO SDNY press release for the sentencing:

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that HAROLD LEVINE, a Manhattan tax attorney, was sentenced today by U.S. District Judge Jed S. Rakoff to 24 months in prison for tax evasion and obstruction of the Internal Revenue Service (“IRS”), stemming from his scheme to siphon millions of dollars of tax shelter fee income from the law firm at which he worked and failing to report the diverted fees as income.  LEVINE’s scheme also involved making false statements to IRS auditors, and urging a witness to provide false testimony to the same IRS auditors who were investigating LEVINE’s receipt of the fees.  

* * * * 

Between 2004 and 2012, LEVINE, a tax attorney and former head of the tax department at a major Manhattan Law Firm (the “Law Firm”), schemed with co-defendant Ronald Katz, a certified public accountant, to obstruct and impede the due administration of the Internal Revenue laws by evading income taxes on millions of dollars of fee income generated from tax shelter and related transactions that LEVINE worked on while a partner of the Law Firm.  Specifically, LEVINE failed to report approximately $3 million in income to the IRS on his personal tax returns during the period 2005-2011.  Most of the fee income LEVINE failed to report was routed by him through a limited liability company LEVINE controlled, which was nominally owned by a family member. 

 As part of the scheme, for example, LEVINE caused tax shelter fees paid by a Law Firm client to be routed from the Law Firm’s escrow account to a partnership entity he co-owned with Katz and thereafter used those fees – totaling approximately $500,000 – to purchase a home in Levittown, on Long Island.  LEVINE caused the home to be purchased as a residence for a Law Firm employee (the “Law Firm Employee”) with whom he then enjoyed a close personal relationship.  Although LEVINE allowed the Law Firm Employee to reside in the Levittown house for over five years without paying rent, LEVINE and Katz prepared tax returns for the entity through which the home was purchased that claimed false deductions as a rental property. 

 In February 2013, LEVINE was questioned by IRS agents concerning his involvement in certain tax shelter transactions and the fees received by LEVINE from those transactions.  During that questioning, LEVINE falsely told the IRS that the Law Firm Employee paid him $1,000 per month in rent while living in the Levittown home.  In addition, when the Law Firm Employee was contacted by the IRS and summoned to appear for testimony, LEVINE urged the employee to falsely tell the IRS that she had paid $1,000 per month in rent to LEVINE.

I do not have the transcript of the sentencing hearing and will post it if and when I get it.  The USAO SDNY press release linked about quotes the sentencing judge as follows:  “There was no one in the world who knew better that he was committing a crime than Harold Levine.”

I do have the following documents that readers interested in the process from acceptance of the plea to the sentencing hearing:

• Levine Plea Hearing Transcript, here.
• Defendant's Sentencing Memo, here.
• U.S. Sentencing Memo, here.
• U.S. Sentencing Memo, Exhibit C, Sentencing Data Chart, here.
• Defendant's Reply Sentencing Memo, here.
• U.S. Letter Response to Defendant's Reply Sentencing Memo, here.
• Docket Entries as of today, here.

I have just a few comments on the linked documents:

Excellent Article on Federal Judges' Views of Allocutions (4/17/14)

I refer students and practitioners to an excellent empirical study of federal judges' views on allocution under FRCrP Rule 32(i)(4)(A), here.  Mark W. Bennett and Ira P. Robbins, Last Words: A Survey and Analysis of Federal Judge's Views on Allocution in Sentencing, 65 Ala. L. Rev. 735 (2013), here.  I first cut and paste the introduction (footnotes omitted) and then offer some of the findings and conclusions.  I omit footnotes and references to footnotes.

I am not a victim. It was stupid. I was wrong.
--Kwame Brown, Former D.C. Councilman 1 

Others can take my life. They can take and make me out as a monster. They can treat me as a monster. But they can't take away my heart, and in my heart I know I did not do those alleged disgusting, hideous acts. 

--Jerry Sandusky, Former Pennsylvania State University Assistant Football Coach 2 

Your Honor, I cannot offer you an excuse for my behavior. How do you excuse betraying thousands of investors who entrusted me with their life savings? How do you excuse deceiving 200 employees who have spent most of their working life working for me? How do you excuse lying to your brother and two sons who spent their whole adult life helping to build a successful and respectful business? How do you excuse lying and deceiving a wife who stood by you for 50 years, and still stands by you? And how do you excuse deceiving an industry that you spent a better part of your life trying to improve?
 . . .
Apologizing and saying I am sorry, that's not enough. Nothing I can say will correct the things that I have done. . . . There is nothing I can do that will make anyone feel better for the pain and suffering I caused them, but I will live with this pain, with this torment for the rest of my life.
I apologize to my victims. I will turn and face you. I am sorry. I know that doesn't help you.
Your Honor, thank you for listening to me. 

--Bernard Madoff, Former NASDAQ Chairman 3 

INTRODUCTION 

Sentencing: "[T]hat gut-wrenching courtroom moment when a real life intersects with esoteric legal arguments and sentencing guidelines that never truly capture a case's nuances." Some individualization does, however, enter the sentencing process through allocution--the defendant's opportunity to stand up and address the court. Despite this opportunity--or perhaps because of it--many judges consider tailoring the sentence to the specifics of a case the "most difficult and draining aspect of their work." The three excerpts above illustrate how drastically different allocutions can be. While Brown and Madoff readily admitted guilt, Sandusky vehemently denied all wrongdoing and instead portrayed himself as the victim. Sandusky was sentenced to thirty-to-sixty-years imprisonment for sexual abuse, and Brown was sentenced to one day in custody plus community service for bank fraud. Soon after hearing Madoff's allocution, then-Federal District Judge Denny Chin condemned Madoff's actions as "extraordinarily evil" and imposed a 150-year sentence--three times longer than the federal probation office had recommended and more than ten times longer than Madoff's lawyers had requested. 9 Given these radically different approaches and the various sentences imposed, did the allocutions serve any valuable purpose? Did Madoff's apologetic allocution make any difference? 

In theory, allocution provides an opportunity for defendants to accept responsibility, to humanize themselves and their transgressions, and to mitigate their sentences, thus ensuring that the sentences are "tailored to fit both the crime and the person who committed it." From the earliest days of allocution to the present time, defendants' procedural rights have expanded in criminal trials, including the right to testify on one's behalf, the right to counsel, the mandatory preparation of presentence reports, and the right to object to their contents. Has this evolution of rights greatly altered the rationale behind the need for allocution? Whatever the answer to this question may be, ultimately judicial discretion is the greatest factor affecting how much weight will be accorded to a defendant's allocution. But this truism raises many critical questions, including the following: When might allocution help the defendant? When might it hurt? Do defense attorneys take allocution seriously? Do they prepare their clients adequately for allocution? How much do federal judges weigh allocution in deciding the final sentence? What features of allocution carry the most weight? 

While commentators have addressed some of these questions in a scholarly or anecdotal manner, this Article answers these questions more directly through a first-ever survey of all federal district judges regarding allocution. This Article discusses the importance of allocution and the relevance, attention, and weight federal judges place on this often-overlooked stage of the criminal-justice process. Part I explores the history of the right to allocute from its foundations in seventeenth-century common law to its modern-day application. Part II outlines our expectations prior to conducting the survey, some aspects of the participating judges' backgrounds and statuses, and the format of the survey. Part III summarizes the results of the survey. Part IV expounds on the survey's findings and includes recommendations for effective allocution and for future surveys on this subject. Finally, this Article concludes with a brief summary of the federal district judges' allocution advice.