Tax Fraud Case Analysis

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The decision is not the first in which the court has held that a district court did not error in not grouping a tax fraud conviction with another conviction.

The decision is nevertheless noteworthy, because the argument in favor of grouping is stronger in the case at bar than in the others.

In U.S. v. Johnson, 117 F.3d 1040 (7th Cir.1997), the two convictions were wholly unrelated; they weren’t even charged in the same jurisdiction.

Likewise, in U.S. v. Chavin, 316 F.3d 666 (7th Cir. 2002), the other conviction was for a bankruptcy fraud that was unrelated to the tax fraud. And in U.S. v. Brisson, 448 F.3d 989 (7th Cir. 2006), the tax conviction was based on submitting a false claim for a return, unrelated to a bank fraud conviction.

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In contrast, in the case at bar, the tax fraud consists of failing to report the proceeds from the wire fraud. Effectively, in order to retain the full benefit of the wire fraud, it was necessary to not report it. The two convictions are thus much more closely related than in the other three cases in which the court has rejected grouping tax fraud convictions with other offenses, even if not closely related enough to warrant grouping.

The case is also significant for a discussion of enhancements, in other cases where double counting may be an issue.

The court wrote, “where a defendant faces separate counts for the criminal activity that produced the unreported income and for the tax crime, and double-counting is possible (unlike Vucko’s case), the court can simply refrain from adding the sec. 2T1.1(b)(1) two-level enhancement to the tax offense.”

Finally, it is noteworthy that the court included dicta, suggesting that double counting may never be a problem in tax evasion cases, citing the Tenth Circuit’s decision in U.S. v. Peterson, 312 F.3d 1300, 1304 (10th Cir. 2002), for support.

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David Ziemer can be reached by email.