Fifth Circuit Reverses Sentencing Court on Conditions of Restitution and Prohibition of Employment (1/14/16)

In United States v. Thody, 2016 U.S. App. LEXIS 298 (5th Cir. 2016) (unpublished), here, the defendant (Thody) was convicted of "multiple counts of tax evasion."  The Fifth Circuit panel holdings seem fairly routine, which is why the decision is unpublished.  Nevertheless, I offer some comments on the opinion.

First, although not further addressed in the opinion, the Court makes this factual statement:

Thody believed he was a "sovereign citizen" not subject to federal law. He therefore believed that the Internal Revenue Code did not require him to pay taxes. 

Did the Court really mean what it said?  Specifically, since a bona fide belief that a defendant does not owe tax is a complete defense to a crime requiring willfulness, as tax evasion surely does, the Court stated a complete defense for Thody.  See Cheek v. United States, 498 U.S. 192, 201 (1991). The Court could have said that Thody claimed that he did not believe the the Internal Revenue Code did not require him to pay tax, but that the jury did not accept that claim and therefore he acted willfully.  But, that is not what the Court said in the quote.  Maybe that is implicit, so maybe I am just too picky.

OK, moving on.

Second, the opinion holds that the sentencing court can stack sentences (make them run consecutively) to achieve the appropriate sentence, whether in the Guidelines range or outside it (here by variance upward, as noted below).  In the case, the court imposed a 90 month sentence comprised of two 45 month sentences for counts one and two (tax evasion counts with aggregate sentences of 60 months each).

Third, the Court reversed the sentencing court's imposition of restitution for the tax crimes convictions.  Restitution is not available for Title 26 convictions except as a condition of some benefit offered the defendant, such as supervised release.  The court remanded to have the district court determine whether to impose restitution as a condition of supervised release.

Fourth, the Court reversed the sentencing court prohibition "from contracting with the Government as a condition of his supervised release."  Although contracting with the Government produced the income involved in the case, the condition here did not meet the criteria as follows (footnote omitted):

A district court has discretion to impose conditions on supervised release, but only if the condition is reasonably related to: the nature and circumstances of the offense, the need to afford adequate deterrence, the need to protect the public from future crimes, and the need to provide treatment to a defendant. Moreover, if a condition is required, it must be imposed to the "minimum extent necessary."

Fifth, the Court held that the sentencing court's upward variance from the Guidelines range was reasonable.  In the course of so holding, the Court said (footnote omitted):

Here, the district court imposed a non-Guideline sentence. The Guidelines, with exceptions not here relevant, require that a sentence on multiple counts run concurrently. In this case, when the district court imposed a ninety-month sentence, by imposing two terms of forty-five months to run consecutively, it varied from the Guidelines recommendation of a forty-one to fifty-one month sentence.

Note that the sentencing court gave a substantial upward Booker variance.  Variances up or down require explanation.  The sentencing court gave a very short explanation.  Here is what the Court of Appeals panel said:

Because it imposed a non-Guidelines sentence, the district court needed to provide a more detailed explanation of its reasoning. The court gave the following reasons: 

the defendant is a person that questions and challenges the jurisdiction of the Court, [and] does not acknowledge the validity of the statute of which he was convicted of. [Therefore][,] [w]ithout an adequate and sufficient sentence, the defendant will not be deterred and will continue his unlawful activities in an identical or similar fashion. 

The district court's reasons adequately explained the basis for Thody's sentence. First, the court explained that Thody's sovereign citizen beliefs caused him to reject  federal law and also reject the notion that it applied to him. Second, because Thody continued to believe that federal taxes were voluntary, the district court explained that an above-guideline sentence was needed to motivate him to pay taxes in the future. Thus, even applying the more burdensome standard of a non-Guideline sentence, under plain error review, the district court gave an adequate explanation.