Posted by: Robert Horwitz | June 13, 2017

The Judge Isn’t Bound by the Guideline Range in Sentencing By ROBERT S. HORWITZ

Plea agreements in criminal tax cases normally have a section containing the calculation of the agreed Sentencing Guideline Range. The plea agreement also typically recites that the Government will recommend a guideline range sentence as long as the defendant meets his obligations under the plea agreement, but that the court is not required to accept the Government’s sentencing recommendations or the parties’ agreements as to facts and sentencing factors.  Most defendants probably assume that in fact the Government’s recommendation is the maximum sentence that they will receive and that if the court sentences outside the Guideline range it will impose a lesser sentence.  This is not always the case, as the defendant learned in United States v. Avan Nguyen, 2016 U.S. App. LEXIS 6390 (5th Cir., April 13, 2017).

Nguyen owned a wholesale salon equipment business. He pled guilty to aiding and abetting the filing of a false and fraudulent corporate tax return.  The plea agreement recited that the Guideline range, after acceptance of responsibility was a level 13, which translates to a 12-18 month term of imprisonment, and that he would forfeit $1.1 million in seized funds.  The district court imposed a sentence of 36 months imprisonment followed by 1 year supervised release and a fine of $250,000.  The reason: the district court disagreed with the Government and Nguyen’s interpretation of certain facts.

During the investigation, the IRS determined that third parties had made almost $5 million in structured deposits into Nguyen’s business accounts. A raid on his house yielded over $3.2 million in cash, most of it wrapped in bundles of $10,000. The Presentence Report discussed the apparent structuring conduct and recommended an upward departure based on either Guidelines § 4A1.3 (underrepresented criminal history) or Guidelines § 5K2.21 (uncharged conduct).  The district court did not accept the recommendation, but did consider the apparent structuring conduct in exercising its discretion under Booker v United States to make an upward variance to the maximum allowable sentence.

Although the Government took the position that there was insufficient evidence that Nguyen was involved in criminal structuring, the district court determined that Nguyen had in fact engaged in criminal structuring. The district court based its finding on several facts beyond the seizure of cash and the structured deposits.  These included that Chase Bank wrote to Nguyen that it believed that structured deposits were made to his bank account, after which he changed the name of his business and opened up a new account under the new business name.  A number of structured deposits were made to the new account.  The district court held that these facts supported a finding that Nguyen knew of the reporting obligations for deposits over $10,000 and knowingly and intentionally had structured deposits made to avoid the reporting requirements.

The court of appeals reviewed the district court’s sentence under an abuse of discretion standard. Finding that there were no procedural errors committed by the district court, that there was sufficient evidence to support its conclusion that Nguyen was engaged in criminal structuring and that the district court articulated a number of factors supporting its sentence, the court of appeals affirmed the sentence.

Criminal tax cases often involve defendants who may have engaged in other financial or tax-related offenses that are not charged. Because plea agreements in criminal tax cases often contain a litany of the defendant’s “bad acts,” this could include facts suggesting that there was uncharged criminal conduct.  From time to time an overzealous special agent may provide the probation officer with evidence about such conduct.  The decision in Nguyen is an object lesson in criminal tax cases: the district court is not bound by the plea agreement.  If presented with evidence detrimental to the defendant, a sentence about the Guideline range may be imposed.

ROBERT S. HORWITZ – For more information please contact Robert S. Horwitz – horwitz@taxlitigator.com or 310.281.3200   Mr. Horwitz is a principal at Hochman, Salkin, Rettig, Toscher & Perez, P.C., a former Assistant United States Attorney of the Tax Division of the Office of the U.S. Attorney (C.D. Cal) and represents clients throughout the United States and elsewhere involving federal and state, administrative civil tax disputes and tax litigation as well as defending criminal tax investigations and prosecutions. Additional information is available at http://www.taxlitigator.com

 


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: