From the desk of David M. Garvin, Esq.

Volume 108

Page 1 of 4

August 2010

Information on the author

David M. Garvin is an attorney who’s practice concentrates in the area of white collar crime defense. Mr. Garvin was admitted to the Florida Bar in 1982. He holds a Juris Doctor Degree from the University of Miami (1982) and a LLM in Taxation from the University of Miami (1987). Mr. Garvin is certified by the Florida Bar as a Tax Specialist (1990). Mr. Garvin is also a licensed Certified Public Accountant in Florida since 1982. Mr. Garvin is admitted to practice before the United States Supreme Court, the Eleventh Circuit Court of Appeals, the Eight Circuit Court of Appeals, the Sixth Circuit Court of Appeals, the United States District Courts for the Southern, Middle and Northern Districts of Florida, the Florida Supreme Court, and the United States Tax Court.      Mr. Garvin’s Martindale-Hubbel rating is “AV”. He is listed in the Pre-Eminent Bar Register as a criminal attorney and as a tax attorney. He is also listed in Super Lawyers.

David M. Garvin, Esq. 200 S. Biscayne Blvd. Suite 3150 Miami, FL. 33131 Tel: (305) 371-8101 E-mail: ontriaI2@aol.com Web: www.DavidMGarvin.com

From the desk of David M. Garvin, Esq.

From the desk of David M. Garvin, Esq.

U.S. v. JACKSON 2010 Lexis 15210 (11th Cir. July 2010)

Defendant was convicted in the United States District Court for the Middle District of Georgia of making false claims against the government by preparing and submitting fraudulent income tax returns to the Internal Revenue Service. Defendant was sentenced to 42 months  imprisonment. Defendant appealed.        Defendant argued that the district court abused its discretion in departing from the sentencing guidelines because the factors on which the district court relied did not warrant an upward variance. He argued that the district court s declining to impose the four-level increase for organizing or leading a criminal activity with five or more participants contradicted its later finding that his scheme "engaged a number of people." The court of appeals disagreed. The fact that the district court declined to apply the four-level enhancement for being an organizer or leader of a criminal activity that involved five or more participants had no bearing on the court s finding that defendant s scheme engaged a number of people. The evidence established that there were a number of people involved, regardless of whether they were criminally responsible for the offense. The district court was entitled to find that $106,165 was a substantial amount of money, and it did not err by taking that amount into account when considering the Section 3553(a) factors. Defendant's above-range sentence of 42 months' imprisonment was procedurally and substantively reasonable.  The judgment was affirmed

U. S. v. SNIPES 22 Fla. L. Weekly Fed. C 1207 (11th Cir. July 2010)

Wesley Snipes was convicted in the United States District Court for the Middle District of Florida, after a jury trial, on three counts of willful failure to file individual federal income tax returns for calendar years 1999, 2000, and 2001, in violation of 26 USC Section 7203. Snipes was sentenced to thirty-six months in prison.     Snipes timely appealed and the government cross-appealed.     Snipes alleges that the trial court committed reversible error in sentencing, jury instructions, and on issues of venue. Circuit affirmed the rulings and judgment of the district court in all respects. The essential facts adduced at trial and the procedural history established that Wesley Trent Snipes was a movie actor and owner of film production companies, including Amen RA Films and Kymberlyte Productions. Sometime around the year 2000, Snipes became involved in co-defendant Eddie Ray Kahn's organization, American Rights Litigators ("ARL"), that purported to assist customers in resisting the Internal

U. S. v. SNIPES (Continued)

exclusive of the 50 States of the Union." Snipes also claimed that as a "fiduciary of God, who is a 'nontaxpayer,'" he was a "'foreign diplomat'" who was not obliged to pay taxes.  When Snipes consulted his long-time tax attorneys about his resistance to paying federal income taxes, they advised him that his position was contrary to the law and that he was required to file tax returns. The firm terminated Snipes as a client when Snipes refused to file his tax returns.     The Court examined whether the district court erred by denying Snipes's June 4, 2007, statutory elective transfer under 18 U.S.C. Section 3237(b) as being untimely.     Snipes claims that when the magistrate judge extended the pretrial motions deadline, the new deadline necessarily extended the period of time in which he was allowed to elect to transfer his trial. This theory rests on the notion that Rule 12(c)'s provision that a district court may set deadlines for pretrial motions somehow supersedes Section 3237(b)’s command that an election to be tried in the district in which the defendant resided must be filed within twenty days after arraignment. Snipes also claimed that the district court abused its discretion when it denied Snipes permission to make a late statutory elective transfer on the basis of his former counsel's "excusable neglect," under Fed. R. Crim. P. 45.     Defendant Wesley Trent Snipes appealed from his criminal convictions, after a jury trial, on three counts of willful failure to file individual federal income tax returns for calendar years 1999, 2000, and 2001, in violation of 26 U.S.C. Section 7203. Snipes alleged that the

trial court committed reversible error in sentencing, jury instructions, and on issues of venue. The 11th Circuit affirmed the rulings and judgment of the district court in all respects.     The essential facts adduced at trial and the procedural history are these: Wesley Trent Snipes is a movie actor and owner of film production companies, including Amen RA Films and Kymberlyte Productions. Sometime around the year 2000, Snipes became involved in co-defendant Eddie Ray Kahn's organization, American Rights Litigators ("ARL"), that purported to assist customers in resisting the Internal Revenue Service ("IRS"). ARL employees, including co-defendant Douglas Rosile, and ARL members sent voluminous letters to the IRS, challenging the agency's authority to collect taxes. The centerpiece of this resistance was the "861 argument" that the domestic earnings of individual Americans do not qualify as "income" under 26 U.S.C. Section 861, because the earnings do not come from a listed "source."     The 11th Circuit found that after adopting tax protest arguments, Snipes failed to pay his taxes for a number of years.  The appellate court held that because a general extension of the motions deadline could not have waived 18 U.S.C. Section 3237(b)'s clear twenty-day deadline, the district court's

denial of the five-month late elective transfer motion was not an abuse of discretion. Nor did the district court abuse its discretion by refusing to grant a waiver of the statutory deadline on the theory of  "excusable neglect" under Fed. R. Crim. P. 45 because defendant's original attorney misunderstood the import of the statutory elective transfer deadline. Finally, it would not have been reasonable anyway to read a general request for an extension of time to file motions as a request to suspend the transfer deadline.  Defendant's Sixth Amendment right to have venue proven as an element of the offense was safeguarded by integrating it into the trial.     Both parties presented detailed venue evidence and the court fully instructed the jury that venue was an element of the offense and that Snipes had to be acquitted if the government failed to establish venue by a preponderance of the evidence.     The appellate court affirmed the rulings and judgment of the district court in all respects.

LANTZ v. C.I.R. 607 F.3d 479 (7th Cir. June 2010)

Appellee taxpayer sued appellant Commissioner of Internal Revenue, challenging 26 C.F.R. 6015(5)(b)(1) that established a deadline for filing claims under 26 U.S.C. Section 6015(f) to two years from the IRS's first action to collect a tax. The United States Tax Court in a divided opinion invalidated the deadline in the regulation. The Commissioner appealed the judgment.     From the deadlines set forth in 26 U.S.C. Section 6015(b) and(c), the Tax                                        (Continue)

LANTZ v. C.I.R. (Continued)

Court inferred that Congress intended Section 6015(f) to have no deadline. However, that interpretation was contrary to how statutes that omitted a statute of limitations were usually interpreted. Moreover, the fact that Congress designated a deadline in two provisions of the same statute and not in a third was not a compelling argument that Congress had meant to preclude the United States Department of Treasury from imposing a deadline applicable to cases governed by that third provision.     The taxpayer's suggestion that 26 U.S.C. Section 6502 provided the proper limitations period was rejected as that limit was not a constraint on taxpayer action, but was the period within which the IRS had to collect a tax. The doctrine of latches was not an adequate substitute for a fixed deadline as its application would have undermined the two-year deadline fixed by Congress under Section 6015(b) and (c). Allowing the Department to devise the limitations period was also consistent with its authority to devise appropriate substantive standards for the grant of equitable relief.  The judgment was reversed.  The case was remanded.

U. S. v. SUAREZ 364 Fed. Appx. 602 (11th Cir. Feb. 2010)

Suarez was convicted of income tax evasion. The amount of tax loss was in dispute. Testimony of an IRS agent who had examined defendant's business return and calculated a gross income provided a basis for a reasonable estimate under Section 2T1.1, cmt., application n. 1. The evidence showed defendant received $ 7 million in federal

funds and transferred over $ 1 million in qualified student federal grant and loan funds into her personal accounts and misclassified the transactions as business expenses or accounts receivable. The two level increase under Section 2T1.1(b)(1) was proper.     Under plain error review, the argument that the source of income enhancement violated the Fifth Amendment was rejected since there was no precedent resolving the issue. Because she used multiple bank accounts under multiple names and misclassified documents to obscure the nature and extent of her income and expenditures, a Section 2T1.1(b)(2) two-level sophisticated means enhancement was proper.         The district court's judgment was affirmed.

U. S. v. Holland Crim. No. 3:09cr139 LEXIS 74028 (Dt. Conn. July 2010)

On April 15, 2010, a jury unanimously convicted Albert Holland of one count of willful evasion of payment, in violation of 26 U.S.C. Section 7201 (Count One), and two counts of filing a false tax return, in violation of 26 U.S.C. Section 7206(1) (Counts Two and Three).     Holland moved for a new trial under Rule 33, which provides that "the court may vacate any judgment and grant a new trial if the interests of justice so require," and for a judgment of acquittal under Rule 29, which requires entry of a judgment of acquittal where "the evidence is insufficient to sustain a conviction." For the reasons that follow, Holland's motion will be denied.

The Court found that a Rule 29 motion should be granted only if the district court concludes there is no evidence upon which a reasonable mind might fairly conclude guilt beyond a reasonable doubt.     Holland's argument was wrong on the evidence, which for Rule 29 purposes was viewed in the light most favorable to the government, drawing all inferences in the government's favor and deferring to the jury's assessments of the witnesses' credibility.     A Rule 29 motion should be granted only if the district court concludes there is no evidence upon which a reasonable mind might fairly conclude guilt.

Buffin v. U.S. Lexis 71588 (W.D. Mich. July 2010)

Buffin sought a reduction of his sentence based upon an argument that the Supreme Court in Santos found that only profits should be used as a basis for sentencing.     The Court found that Buffin’s misinterpreted Santos's holding. In Santos, a four justice plurality found that "proceeds" indeed means "profits" in all cases. U.S. v. Santos, 553 U.S. 507 (2008).  However, a four justice dissent found that "proceeds" means "gross income" in all cases.      The tie-breaking concurrence held that "proceeds" means "profits" in some cases and "gross income" in others. Because no opinion in Santos attracted a majority of Justices, the position taken by those Justices who concurred in the judgment on the narrowest grounds represents its holding.                                            (Continue)

From the desk of David M. Garvin, Esq.

Buffin v. U.S. (Continued)

As a result, the Sixth Circuit has interpreted Santos as holding that proceeds means profits only when the 1956 predicate offense creates a merger problem that leads to a radical increase in the statutory maximum sentence and only when nothing in the legislative history suggests that Congress intended such an increase. U.S. v. Kratt, 579 F.3d 558 (6th Cir. 2009).

Revenue Service. ARL employees, including co-defendant sent voluminous letters to the IRS, challenging the agency's authority to collect taxes.    The centerpiece of this resistance was the "861 argument" that the domestic earnings of individual Americans do not qualify as "income" under 26 U.S.C. Section 861, because the earnings do not come from a listed "source."     The ARL message appeared to have found a welcome audience in Snipes. Although Snipes earned more than thirty seven  million dollars in gross income from 1999 to 2004, he did not file individual federal income tax returns for any of those years. These were not, however, silent years. After meeting with ARL, Snipes began a long conversation with the IRS. He sent treatises describing theories about why the IRS was powerless to collect income taxes from him and several altered tax forms demanding money for taxes he had rendered in earlier years.  Thus, for example, in April 2001, Snipes sent an altered form 1040X, styled as an Amended United States Individual Income Tax Return, in which he demanded a refund of over seven million dollars for taxes paid for the calendar year 1997, allegedly paid in error. Snipes's correspondence with the IRS advanced several arguments justifying his failure to file his personal tax returns, including that he was a "nonresident alien to the United States," that earned income must come from "sources wholly outside the United States," that "a taxpayer is defined by law as one who operates a distilled spirit Plant," and that the Internal Revenue Code's taxing authority "is limited to the District of Columbia and insular possessions of the United States,                                    (Continue)

Volume 108

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August 2010

Volume 108

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August 2010

Volume 108

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August 2010