Submissions in Advance of Sentencing for Former Tax Court Judge Kroupa (6/20/17; 6/22/17)

I provide an update that Kroupa received a sentence of 34 months and her husband received a sentence of 24 months.  See here.  I will have more comment in a new blog when I have examined the underlying documents and more reports.  The USAO press release is here; the summary from the press release is:

DIANE L. KROUPA, 61

Minnetonka, Minn.

Convicted:Conspiracy to Defraud the United States, 1 count Sentenced:34 months in prisonThree years of supervised release$457,104 joint restitution

ROBERT E. FACKLER, 63
Minnetonka, Minn.

Convicted:Obstruction of an IRS audit, 1 count Sentenced:24 months in prisonOne year of supervised release$457,104 joint restitution

At the Procedurally Taxing Blog, Keith Fogg has a very good update on the sentencing process for former U.S. Tax Court Judge Diane Kroupa.  Sentencing Fight in Former Judge Kroupa’s Criminal Case (Procedurally Taxing Blog 6/20/17), here.  As I read the docket entries, here, the sentencing is set for June 22, 2017 at 10 am.  Keith provides links to the Government submission, here , and to Kroupa's submission,here.  I will  post again when I get information about the sentencing.

JAT comments:

1.  Kroupa's submission calculates the Guidelines range at 30 to 37 months based on the following:

Ms. Kroupa pled guilty to conspiracy to defraud the United States beginning in or before 2004 and continuing at least through in or about 2012, in violation of 18 U.S.C. § 371. Pursuant to the plea agreement, the base offense level is 18. A 2-level increase applies for abuse of position of public trust. An additional 2-level increase applies for obstruction to justice. The Government recommends a 3-level reduction for acceptance of responsibility. Based on the total offense level of 19 and a criminal history category of I, the guideline range of imprisonment is 30 to 37 months. Ms. Kroupa asks the Court to vary from the Sentencing Guidelines for a sentence of 20 months.

2.  The Government defers recommending a sentence until it has reviewed Kroupa's submissions.  The docket entries do not reflect that the Government has yet made its recommendation.

3.  As one would expect, Kroupa's submission plays up the factors that could cause a sentencing judge to make a variance.  There is considerable discussion of a long history of psychological and emotional issues.  This is, of course, standard fare in appealing to the considerable variance discretion that a sentencing judge has under 18 USC § 3553(a) and United States v. Booker, 543 U.S. 220  (2005).  Some other interesting points in the submission are:

On June 14, 2014, she retired as a Tax Court Judge due to a permanent disability. Attached are her letter and the letter of Dr. Pak supporting her resignation due to a permanent disability. All this took place after the search warrants were executed and it became apparent Ms. Kroupa was a target of the criminal investigation. This understandably caused extreme and additional stress. It exacerbated her long-standing psychological and emotional issues for which she has sought treatment.

* * * *

F. The need to avoid unwarranted disparities 

Ms. Kroupa’s former spouse, Robert Fackler, is also to be sentenced on the same conduct as Mr. Kroupa. Ms. Kroupa should not be sentenced in a disparate manner from Mr. Fackler. In his position on sentencing, Mr. Fackler accuses Ms. Kroupa of exerting control over him and eventually intimidating him so much that he was obliged to do what she demanded. Mr. Fackler argues that Ms. Kroupa kept him relatively passive and took full advantage of her intelligence  and emotionally controlling abilities. While Mr. Fackler knew it was wrong to mislead the IRS, he simply followed Ms. Kroupa’s demands for more money. 

Ms. Kroupa takes issue with this position. While Ms. Kroupa and Mr. Fackler did have a complicated relationship, she in no way manipulated him into committing a crime. The parties have gone through an acrimonious dissolution in which they cast a great deal of blame upon each other. The failure to report their income was the fault of both parties equally. The parties committed these acts together during their marriage. 

In its position paper with respect to sentencing Mr. Fackler, the Government urges the Court to take into consideration that Mr. Fackler admitted his tax fraud soon after being charged and agreed to plead guilty well before Ms. Kroupa. Ms. Kroupa was entitled to a review of the discovery against her with legal counsel. Ms. Kroupa was residing outside of Minnesota, which made that review of discovery more difficult to arrange. Once she had completed that review and discussions with counsel, she promptly entered into negotiations to resolve the case. 

4.  The Government summarizes it argument (albeit without a sentencing recommendation) as follows:

III. The Appropriate Sentence in Light of 18 U.S.C. § 3553(a) 

Over a nearly ten-year period, Ms. Kroupa and her husband conspired to defraud the United States Treasury out of hundreds of thousands of dollars of taxes they knew they owed. Their fraud was not a momentary lapse of judgment. It was a lifestyle choice. Ms. Kroupa and Mr. Fackler had no pressing financial need that drove their conduct. They made a very comfortable living, more than $300,000 a year between them, which included Ms. Kroupa’s $170,000 salary as a US Tax Court Judge. They stole money from the United States to maintain spending habits that went for luxuries, not necessities, including multiple vacation trips to places around the world, expensive clothing, and jewelry. Ms. Kroupa’s crime is particularly egregious because of her position as a US Tax Court Judge and, before that, a Minnesota State Tax Court Judge. Ms. Kroupa held a special position of public trust. She understood how her brazen, multi-year tax fraud was a fundamental betrayal of that trust. She knew precisely what she was doing, she knew that her actions were criminal, and she used her knowledge of the tax laws and her position as a Tax Court Judge to aid her fraud or to chill those, like her tax preparer, who might have otherwise challenged claims that formed the basis of the fraud. 

Ms. Kroupa had many opportunities to change her course of conduct. Indeed, when she and her husband were audited in 2006, she could have seen that as a wake-up call. She did not. Instead, Ms. Kroupa continued to commit tax fraud, but used her knowledge of the tax laws to spread out the fake deductions in a way that she believed would be less detectable by the IRS. Similarly, in 2012, when she and her husband were audited again, Kroupa’s first response was to provide false information to the IRS Revenue Agent. Later, when it appeared that the case was being investigated for possible criminal charges, Kroupa coached Fackler to create a story that would falsely exculpate her. For at least 10 years, Ms. Kroupa made choices – choices to commit, and also to conceal, significant crimes against the United States. For at least 10 years, each year, Kroupa to violate her oath as a lawyer and a judge, to cheat the taxpayers of the United States and the State of Minnesota, and to place her own greed above her obligation to obey the law.