Tax fraud often results in harsh criminal tax penalties; however, you really never know what a particular tax crime sentence will be until you have your day in court, then the appeals for that sentence, and then possibly the appeals for those appeals. Take for example the case of United States v. Trupin.
According to the Second Circuit Court of Appeal:
Trupin’s [tax] crimes “¦ employed a number of devices to avoid reporting over six million dollars in income over a period of six years. Trupin enlisted the aid of family members to claim ownership of certain assets, created phony paper trails, employed shell corporations and trusts, and shipped expensive assets to the Vancouver Islands in Canada.
The district court, in applying the federal sentencing guidelines, sentenced Turpin to a seven month prison sentence and three years of supervised release (AKA probation). Judge McKenna, the district court judge for the southern district of New York, had this to say about the sentencing guidelines that apply to tax crimes:
I am going to sentence at the lowest available sentencing range in this case. I don’t want to spend half an hour complaining about the guidelines, but this guideline is one of the worst I have ever seen.
The tax attorney must have done a pretty good job putting on this case, given the judge’s statements.
The government appealed the low sentence, arguing that the district court’s decision to impose a seven-month term of imprisonment — 34 months below the bottom of the applicable guidelines range — was unreasonable. Upon review, the second circuit court had this to say about the District Court Judge McKenna’s opinion:
During the initial sentencing hearing, the district court opined that “this guideline is one of the worst I have ever seen.” And at resentencing the court indicated that “a few weeks in jail for most of us would be a very, very significant punishment.” We have rejected general policy disagreements such as these on two occasions. Sentencing policy is for Congress and the Sentencing Commission, not judges.
It is rare to see an opinion where a circuit court overturns a determination that involves some factual determinations made by the lower court judge. In this case the lower court judge appears to have exercised his discretion to depart from the sentencing guidelines – which, at the time that the judge issued his opinion, was a right that judges were granted under a recent Supreme Court case.
Had the lower court judge been less vocal about his negative opinion of the sentencing guidelines, the government probably would not have been able to sustain their appeal and the taxpayer’s low sentence would probably have stood.
That leaves me wondering if the lower court wasn’t using this case (and this taxpayer) to test the waters to see exactly how far a judge can depart from the sentencing guidelines pursuant to the then-recent Supreme Court case that granted the courts this power….