Convicted Defendant After Sentencing in Seeking Third Delay to Report to Prison Files an Unusual Document (1/22/26)

I write today on one of the more unusual documents I have seen filed in a criminal tax proceeding. By jury verdict, Richard Brasser and a co-defendant (Gregory Gentner), co-officers of rFactr (a software company) were convicted of 5 counts of § 7202 willful failure to account for and payover trust fund taxes and acquitted of 2 counts each of § 7201 false returns and one count (for Brasser) of §7201 tax evasion. The judge sentenced Brasser and the co-defendant to incarceration. The co-defendant started and completed his prison time. By contrast, Brasser strung out the time to report to prison, but that time fell due this month (January 2026).

As noted Brasser filed usual motions upon conviction but did not succeed. Finally, seeking the third delay to report to prison, Brasser, acting pro se, filed the document I discuss here. The document is at #161 of the docket entries. (The CL docket entries are here.) Unfortunately, the particular document is not available on CL, but I have posted it to my Google Docs here. At the point of filing the document, the issue before the court was whether the court would allow the third requested extension of time to report to prison.

The document is a letter dated June 9, 2024 from Mark Matthews to “Whom It May Concern” with a Re caption “Richard Brasser – Tax Matter.” The body of the motion says that the author had consented to its filing. The body of the letter is important so I copy and past it here (bold-face supplied by JAT):

I am writing on behalf of Richard Brasser to provide important context in connection with his conviction for what are commonly referred to as employment tax violations (while being acquitted of the more commonly known charges of false tax returns and evasion).

I have significant experience within our criminal tax system, having served as an Assistant US Attorney in the Southern District of New York, the Deputy Assistant Attorney General for the Department of Justice's Tax Division where I was responsible for all tax prosecutions nationwide, the Chief of IRS Criminal Investigation (which is the sole investigative agency for suspected federal criminal tax violations), and the Deputy Commissioner of the IRS (or the #2 official), responsible for all examination, collection, and investigation activities as well as taxpayer services. I have been involved in many hundreds of tax investigations and prosecutions for over 30 years on both sides of the table - as a prosecutor, investigator and as a defense attorney. Based on my experience the indictment of Mr. Brasser was entirely unwarranted and one of the most egregious examples of prosecutorial discretion I have ever encountered.

In full disclosure, I was a paid lawyer for Mr. Brasser for a brief period prior to his indictment. But I am not charging a fee for this letter. In my  paid role for Mr. Brasser, I was joined by two other very senior former DOJ/IRS officials in an effort to try and convince the DOJ' s Tax Division what a terrible injustice would be brought by such an indictment and how much damage it would do to the tax system.

We argued strenuously that this prosecution should never have been brought. Mr. Brasser made a voluntary disclosure to the IRS of the issues his company was having keeping current on employment taxes. It is an extraordinary step of courage and accountability for a taxpayer to approach the IRS and self-report a serious compliance issue. Most taxpayers would prefer to play the audit lottery. It is almost unheard of for the government to indict a taxpayer who has approached the government, reported his issues, and made substantial efforts to come into compliance, and never in a case like this to my knowledge where the taxpayer has told the truth and made significant efforts to come into compliance. It is simply extraordinary, and we argued to the Tax Division what a terrible message this would send to other taxpayers and importantly, the thousands of tax professionals who would learn of it. As a tax practitioner, it is hard enough to get taxpayers to come forward and correct non-compliance, and this prosecution will make it even harder.

I had these same views of employment tax cases when I was the chief of the criminal investigators. In 2000, I spoke at a conference of over five  hundred collection agents. These collection officers referred many employment tax cases to the criminal investigators when they saw instances of businesspeople not properly remitting employment taxes to the IRS. As collection officers, they were very unhappy that so few cases were accepted for additional investigation or prosecution. So, I carried an unpopular but important message to them. I acknowledged the undeniable fact that many tens of thousands of employers fall behind on employment taxes each year. Due to the essentially strict liability of our employment tax laws, each of those cases is a technical criminal violation, as was Mr. Brasser's. But I reported that the IRS saved the criminal sanction for the most egregious cases. While there may have been an egregious case unknown to me in the past, we simply did not prosecute businesspeople who made the error of paying vendors and employees before the IRS, when it was clear they were struggling. Given the abundance of employment tax cases to pursue, we were much more likely to select cases where the businessperson was spending  those funds on themselves - for a big house or a new boat, for example. Had I been presented with a case like Mr. Brasser's when I was at the IRS, I would not have referred it to the Department of Justice for prosecution and when I was at the Justice Department, I would have declined such a case.

Unfortunately, several years ago, this philosophy changed, and now the IRS and DOJ occasionally will pursue an employment tax case simply where the taxpayer made bad decisions to save their business, even if they did not directly profit personally and spend the funds on themselves (sic). But when you add to this fact pattern that the taxpayer (a) made a voluntary disclosure, (b) always acknowledged taxes due and owing, (c) never lied to accountants, the IRS or created false documents, (d) did not use cash payments to conceal liabilities, and (e) repaid all taxes plus interest well before the indictment was issued, it is simply incomprehensible that the government chose to pursue a case like this.

Given the almost strict liability provisions of the employment tax, however, many of these important features of the case were technically  irrelevant to the jury's deliberations. They had no choice but to convict if they followed the judge's instructions on the law. But the jury acquitted on every other charge where they could evaluate whether Mr. Brasser had a criminal state of mind - the false return and evasion charges.

As for the conviction in this case, the experienced federal judge noted: "I don't believe I've ever participated in a case where there was this much effort to settle a case civilly which ultimately ended in an indictment." Neither have I.

I hope that this information will be of value to anyone evaluating Mr. Brasser's fitness for work and attendant responsibilities.

Sincerely,

/s/ Mark Matthews

Mark Matthews

 JAT Comments:

1. The story that Matthews summarizes in his letter (see particularly the bold-face) is different than the story told in the indictment, here, and the Government’s sentencing memorandum here. I will leave for readers with interest in the potential discrepancies to sort through the divergent stories and which may be the more accurate description of the relevant facts. I will note that, at Brasser’s sentencing, the sentencing judge did not have the Matthews letter and only received it much later on the third request to delay starting the prison sentence. Further, the letter is not mentioned in the Government's response to the motion to extend filed after the letter was filed and in the Court's denial of the request for the third extension to report to prison. Probably because the contents of the letter was not relevant at that stage of the case (if it were even relevant to an earlier stage).

Caveat: I know Matthews and know him to be an honorable and ethical lawyer and a good person. I am not saying that the story he tells is not a fair summary of relevant facts. I just say that the story diverges from key documents the Government submitted which were acted upon by the judge in sentencing. I have no idea whether the Matthews letter could have affected sentencing or even the earlier development of trial. Matthews does note in the letter that the jury had no option but to convict under the jury’s instructions. So, if those instructions hold up on appeal, the conviction will stand and probably the sentence as well.

2. For some reason, the indictment charges only for “Failure to Truthfully Account for and Pay Over Trust Fund Taxes.” As readers likely know, employment taxes involve (i) the employer’s share due and payable by the employer and (ii) the employee’s share due and payable by the employee but collected and paid over by the employer. Only the employee’s share is trust fund tax. Trust fund is an important designation because those monies are deemed paid to the employee with the employer withholding, accounting for, and paying to the IRS to credit against the employee’s taxes. In truth, the defendants caused rFactr to fail to pay over both the employer’s and the employees’ shares of the employment tax. It is not clear to me why the indictment only charged for failure to account for and pay over only the employee’s share.

• I think that the sentencing loss calculation included both the employer’s and employees’ shares of the employment tax. The employer’s share would have been includible to the loss calculation as relevant conduct. See Government Sentencing Memo, here, at p. 6-8. 

3. Brasser tried to enter the IRS’s Voluntary Disclosure Program (“VDP”) and received an initial acceptance, pending completion of all the requirements of the program. There is no indication that he completed all the requirements of the VDP. In any event, it appears that, through the VDP, he only sought to absolve himself of potential liability for the trust fund share and did not address the employer’s share. It is a practice used by some responsible persons and their practitioners to try to resolve only the employees’ trust fund share on the notion that the responsible person is not personally liable civilly for the employer’s share. However that practice plays out, it certainly cannot relieve the responsible person of criminal liability for either portion of the employment tax.

4. Readers with acces to Law360 can access the following article: Anna Scott Farrell, Former IRS Official Criticizes CEO's Tax Prosecution (Law360 1/8/26).