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Appellate Law

: Appellate Law and Practice

CA1: surprise! creating false invoices to defraud Uncle Sam is corrupt

By S. COTUS

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U.S. v. Marek, No. 07-2437 (11/26/08). This is sort of interesting. There was an audit by the IRS. The defendants appeared to participate in the audit in good faith. Problem was that they went so far as to procure back-dated invoices from vendors that would explain why some amounts paid were expenses rather than under-the-table untaxed salaries. This satisfied the agents, who were not told that these were recreations. The defendants were indicted under a ?Klein Conspiracy? theory under 26 U.S.C. § 7212(a). The First Circuit says:

...the plain language of the statute supports an interpretation requiring proof that the defendant 1) corruptly, 2) endeavored, 3) to obstruct or impede the due administration of the Internal Revenue laws. See 26 U.S.C. § 7212(a); see, e.g., United States v. Wilson, 118 F.3d 228, 234 (4th Cir. 1997). Supplying false documents knowing that the documents will be used to deceive the IRS during an audit is a quintessential violation of the statute.

The First seems at a loss to explain why went wrong was bad, especially when it comes to intent. But, the First says that a businessman would have had some suspicions that creating invoices out of thin-air was okay.

I ain?t losing sleep about this. He didn?t get a long prison term, and his whole conspiracy seems to be to defraud the government of employment taxes which ultimately hurt his employees.

Full post as published by Appellate Law and Practice on November 29, 2008 (boomark / email).