A federal district court in Illinois recently denied multiple motions in a tax crime case seeking acquittal and a new trial. The motions stemmed from the defendant providing information to investigators who conducted an early morning interview, purportedly on an investigation into the defendant’s bank.
The motions also involved the court’s decision to not provide a good faith jury instruction prior to conviction, as the defendant had requested pre-trial. However, the court was not moved by the defendant’s arguments, and denied the motions.
If you find yourself facing criminal tax prosecution, you will need capable legal representation to protect your very liberty and net worth. To learn more about the services that our dual licensed Criminal Tax Defense Lawyers & CPAs offer, call the Tax Law Offices of David W. Klasing at (800) 681-1295 or book online here to schedule your first reduced rate case assessment today.
This past month, Judge Franklin U. Valderrama of the United States District Court for the Northern District of Illinois, Eastern Division, issued an opinion in the case of Patrick D. Thompson, denying all motions to acquit and, in the alternative, receive a new trial.
Thompson was indicted and convicted of two counts of making a false statement with the intent to influence the Federal Deposit Insurance Corporation (FDIC) and a mortgage lending business, as well as five counts of filing a false tax return.
At 8:15am on December 3, 2018, special agents with the FDIC and the IRS’ criminal investigations division (IRS-CI) showed up at Thompson’s personal residence to interview him. At trial, one of the agents testified that, during the interview, the parties discussed Thompson’s loan at Washington Federal. Thompson provide information about the loan when questioned.
According to the transcript of agent testimony, Thompson was told that the agents were investigating Washington Federal but was never told that he or his taxes or filings were the subject of any investigation. However, toward the end of the interview, agents served Thompson with a grand jury subpoena that called for Thompson to appear and provide records, including federal tax records, materials used to prepare federal tax returns, and loan and credit applications. The subpoena also called for Thompson to produce records related to the purchase of his primary residence, a rental residence, and a third property owned by Thompson located in Michigan.
These tactics are commonplace in IRS criminal tax investigations. Even though federal agents must provide the subject of the interview with warnings about their right to decline the interview without legal representation present, the requirements for these warnings are allowed to be modified from the Miranda requirements when someone is being arrested. This has the effect of making many interviewees less concerned and more open to answering questions without their attorney. Many targets are told: “This is probably just a misunderstanding” and are encouraged to try and explain away any potential “misunderstanding” that the government has with them.
In this case, the court determined that the actions of the federal investigators were appropriate, and that the information that they gained from the interview was admissible. This is why it is so important to never speak freely agents with IRS criminal investigation division agents without an attorney present. If you are approached by federal agents with the IRS or another federal agency that are accompanied by IRS agents with questions, be sure to contact your Criminal Tax Defense Attorney as soon as possible.
Prior to trial, Thompson requested that the Court give a good faith instruction to the jury. The good faith instruction comes from the seminal tax crimes case of Cheek vs. United States, where the Supreme Court found that, in general, a defendant’s “good faith belief” that they were not in violation of federal tax code would contradict the “willfulness” element of many tax violations. Citing Cheek, the IRS Tax Crimes Handbook states, “A defendant’s good faith belief that he [or she] is not violating the tax laws, no matter how objectively unreasonable that belief may be, is a defense in a tax prosecution.”
The District Court chose not to provide a good faith instruction to the jury, determining that a good faith jury instruction was neither necessary nor warranted by Cheek in Thompson’s case. The Court instructed the jury on the definition of willfulness under the statute. Specifically, the Court instructed the jury that, to reach a conviction, the jury must find that Thompson “knew he had a legal duty to file a truthful tax return, but when he signed the return, he did not believe it was truthful as to a material matter.”
Thompson filed a motion for a new trial, arguing that the Court erred in failing to provide the good faith jury instruction, but Thompson’s motion was rejected. The Court relied on precedent from the Seventh Circuit that found that a good faith instruction is not required where the jury is instructed on willfulness and evidence did not support the instruction. As the Court saw it, no evidence was presented at trial that Thompson did not know the law or that he misunderstood it.
Without a jury instruction that explicitly touches on the good faith defense to certain tax violations, it is up to the defendant and their legal representation to make it clear to the jury at trial that they did not believe they were doing anything wrong. In the face of this uphill battle, it is important to have experienced and resourceful Criminal Tax Defense Attorneys on your side to defend your case effectively.
To schedule your first-time case evaluation for a reduced rate, reach out to the experienced dual licensed Criminal Tax Defense Attorneys & CPAs at the Tax Law Offices of David W. Klasing at (800) 681-1295 or book online here to schedule your first reduced rate case assessment today.
If you are dealing with serious tax matters, you deserve tax assistance that you can rely on. Schedule your first reduced-rate case evaluation with our Criminal Tax Defense Lawyers by calling (800) 681-1295 today or schedule online here.
If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!