Articles Posted in Legal News / Legal Information

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On January 10th, 2017, it was announced that Jared Kushner, Donald Trump’s son-in-law, was appointed as Senior Advisor to the future President.  News reports  of “conflict of interest” by Donald Trump, Jared Kushner and the Trump family have  morphed  into allegations of insider trading, a crime punishable by prison and significant financial penalties.

New York Senator and Senate Minority Leader, Charles Schumer, brought up the issue of insider trading and cabinet nominees at a news conference last week, and…POLITICO reports that Congressman Elijah Cummings is looking at corruption hearings on the Trump business and its ties into the government.

There is talk of a pending Congressional criminal hearing on violations of Stock Act of 2012 and insider trading charges in contemplation against Donald Trump and his family members.  The Stock Act of 2012 was enacted to restrict insider trading by members of Congress and their staff and can extend to the President.  The inquiry examines the extent to which Donald Trump, Mr. Kushner and Trump family members have exploited access to government policy in making real estate ventures.

The Stock Act, according to a former ethics advisor to President Obama, Attorney Norm Eisen, “…is probably one of the things that is giving Trump’s lawyers pause.”  Eisen wrote in an email: “As long as he maintains an interest in his businesses, the temptations and opportunities for information to leak back-and-forth between him and his family will be too profound.” The email goes on to state that violation of the Stock Act and other laws, is a scandal that can bring ruin on Trump family members as they pursue real estate transactions, current and future, after gaining access to information from their father.  The Office of Government Ethics (OGE), which sets ethics policy for the Executive Branch of the Federal government, has yet to comment on on the matter.  The reason is at this time, pre-inaugural, there are no violations.  The OGE has policy statements clarifying this issue that executive branch employees cannot engage in a financial transaction using nonpublic information.

Legal definitions are needed here……What is insider trading?  The securities laws broadly prohibit fraudulent activities of any kind in connection with the offer, purchase, or sale of securities. These provisions are the basis for many types of disciplinary actions, including actions against insider trading. Insider trading is illegal when a person trades a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading.

The SEC recently adopted new rules, 10b5-1 and 10b5-2 which go a long way to reach investment in non-publicly traded stock companies, such as a  non-traded corporate ‘shell’ into which a real estate investment is owned. The Rule states that Rule 10b5-1 provides that a person trades on the basis of material nonpublic information if he/she is “aware” of the material nonpublic information when making the purchase or sale. The rule also sets forth several affirmative defenses or exceptions to liability. The rule permits persons to trade in certain specified circumstances where it is clear that the information they are aware of is not a factor in the decision to trade, such as pursuant to a pre-existing plan, contract, or instruction that was made in good faith.

Where do we go from here?  First, do not confuse conflict of interests with insider trading.  Second, seek out information on the investors, foreign governments and banks whom benefit from Trump properties.  And thirdly, follow my blog.

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Impeachment is governed by Article II Section Four of the U.S. Constitution, which  states that the President shall be removed from office on impeachment for and conviction of treason, bribery or other high crimes and misdemeanors.  Treasons is levying war against the United States, or in adhering to their enemies, giving them aid and comfort.  Bribery is defined in federal statutes, not in the constitution.  High crimes and misdemeanors likewise is defined by looking at old British case law, there is no definition in our constitution.  And yes, a sitting president can be impeached for things done before being sworn in.

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Source: Wikimedia.org

Impeachment applies to the President, Vice President, and can, and has, been used to remove senators, congressman, federal judges and other “civil officers.” Remember Vice President Spiro Agnew? He avoided a near impeachment, and resigned instead in 1973.  Agnew was later indicted for things done when he was governor.  An impeachment is an indictment.

Members of the House of Representative (congressmen and congresswomen) bring the charges and the Senate sits as a jury and decides whether to convict or acquit.  The Chief Justice of the Supreme Court conducts the trial if a president is facing impeachment, in all impeachments the Vice President presides.

The actual prosecutor who brings witnesses before the Senate is someone appointed to the job by the House of Representatives from its own members.  If a President is impeached (brought to trial) he can select his own counsel, or represent him/herself.  Removal from office is all that can be done and no jail or fines can be levied, unless the Senate wants to do such.  There is no clear rule on how many votes are needed to impeach in the House of Representatives, nor to convict in the Senate, but historically it has been a simple majority vote.

In any federal or state criminal trial, the proof must be beyond a reasonable doubt, but that is not the standard in an impeachment trial.  The constitution is silent on the standard of proof needed to convict, the Senate has voted on the question in the past but lets each individual Senator decide if the proof is sufficient even if it is less than beyond a reasonable doubt.  If all this sounds like there are no clear rules it is because there are no clear rules.  Defining high crimes and misdemeanors can and is not defined in the Constitution.  Maladministration, whatever that is, has been derided by writings in the federalist papers, but no definition has been agreed upon.  Think in terms of acts that undermine the legitimacy of government, such as abuses of public trust, as well as bribery and treason.  The right to remain silent does apply to a president on trial, which means he has all his Fifth Amendment rights as a citizen.  As to punishment, removal from office is not required and the Senate can prescribe a lesser punishment.  Does all this seem somewhat lacking in form and substance?  Can it be a political?  Yes.  Can it be personal?  Yes.  It all comes down to the character and ethics and historical perspective of those elected to the House of Representatives and the Senate.

For more information on impeachment:

 

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Cecil_the_lion_at_Hwange_National_Park_(4516560206)

Source: Wikipedia

The Daily Mail reports that Walter Palmer, the Minnesota millionaire dentist, is thriving and Cecil the Lion….is still dead.  But the first anniversary year of the killing has revived the protest by those who are still outraged at the staged killing of the park animal.

Dr. Walter Palmer, one year ago, had his trophy kill gutted and readied to be shipped to his home in the U.S. when the story broke and brought a firestorm of outrage on the bewildered dentist.  The millionaire dentist who was forced into hiding for a brief time has avoided prosecution both in Zimbabwe and the United States.  Zimbabwe abandoned its attempts to extradite Dr. Palmer and announced that no laws had been broken. I personally am starting a fundraising project to raise money for Dr. Palmer to have an all expense paid trip to China where he can have a free ride in an open door-less car to visit Badaling Safari World in Bejing, China.

Unfortunately for Walter Palmer, the international outrage over the killing of Cecil the Lion is not going away.  The wild lion population is estimated at 20,000 cats.  One hundred years ago, the estimated lion population was 200,000.  Over the year since Cecil the Lion was killed, Australia banned the import of lions taken as trophy kills.  France also banned the import of lions taken as trophy kills.  This Fall there will be a vote by the countries in the 182 member Convention on International Trade in Endangered Species to limit or ban the taking of lions as trophy kills.  In Africa, Kenya placed a ban on the taking of lions as trophy kills.  Botswana joined the ban, as did Zambia.

In a coincident of good timing the documentary movie “BLOOD LIONS” was released within a few weeks of the killing of Cecil the Lion.  The movie exposed the trophy killing business where animals are bred for killing.  The population of “ranch lions” was reported at seven thousand lions, all raised for a $50,000.00 fee for trophy-killing.

One aspect of the taking of Cecil’s life, which is heart wrenching, is the manner of death imposed by Dr. Palmer.  At first Dr. Palmer wounded Cecil with a misplaced bow and arrow shot.  The wounded lion, which was in reality a refuge-protected park animal from the adjacent park, survived the arrow and escaped the kill zone created by Dr. Palmer’s hired hunters.  It took them almost two days (40 hours) to follow the blood trail from the arrow injury.  After 40 hours of tracking Dr. Palmer and his hired hunters found Cecil and Dr. Palmer was permitted the “honor” of killing Cecil with a high powered rifle.  Cecil the lion was reported to have been illegally lured to come from the safety of the park by the hunter and re-located onto privately owned land of an adjacent farm.  Once Cecil was brought out of the game park the determination was made that a kill would be approved.  Cecil was butchered, skinned and his skin was removed as a trophy for Dr. Palmer.  One year has passed and little has changed and the trophy killing by recreational hunters continues all around the world.

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The U.S. Department of Justice announced on July 22, 2016 the unsealing of what will be an epic Medicare fraud sweep involving members of the South Florida community, both in Miami and Fort Lauderdale.  This is the largest Medicare Fraud crime federal indictment in the history of the U.S. Department of Justice.  It involves a network of doctors, hospitals, health care providers, adult living facilities (ALF’s), nursing homes, and private physicians and health care providers who have collectively, (allegedly) fraudulently billed Medicaid and Medicare in excess of one billion dollars.

Named in 300px-FBISealthe unsealed indictment is the owner of a business that owns and operates over 30 facilities for profit that provide nursing and assisted living services.  The allegations include conspiracy, bribery, kickbacks and fraudulent billing of services either not provided or, as some unconfirmed reports indicate; provided to dead people.  The unsealed indictment is one of many that the joint task force anticipates will be bring dozens of people to court as criminal defendants in federal court in South Florida.  The Office of the Inspector General of the U.S. Department of Health announced it believes in excess of $2.5 Billion of fraudulent charges are paid out every year by Medicare and Medicaid fraudulently and that South Florida is the focus of the task force.  Also named in the unsealed indictment is Odette Barcha, 49, and Arnaldo Carmouze, 56, all of Miami-Dade County.

Philip Esformes, the owner of more than 30 facilities, was named as the “mastermind” of the conspiracy.  He is represented by attorney Marissel Descalzo and Michael Pasano of the Carton Fields law firm.  In 2013, Attorney Michael Pasano  also represented Karen Kallen-Zury who was convicted and found guilty,  along with others, of running a $70 million Medicare fraud and bribery scheme involving mental health hospitals.  Also convicted in the Southern District of Florida in that case was Daisy Miller of Hollywood and Michele Petrie of Fort Lauderdale.

The Miami Herald wrote that Philip Esformes, age 47, is one of the richest men in Miami and his involvement in the one billion dollar scheme is the source of his accumulated wealth. According to the government, hospitals owned and controlled by the conspirators referred some of the thousands of Medicare patients (whose names are not revealed because of HIPA regulations) for outreach mental health care.

One of the hospitals not named in the indictment is the Larkin Community Hospital in South Miami.  The Justice Department alleged in the indictment some of the kickbacks were ‘disguised’ as payments for “escort services” provided to Mr. Esformes as well as related travel and hotel expenses reportedly billed to Medicare for providing mental health services to Medicare and Medicaid patients, all of whom remain unnamed.

The press release from the U.S. Department of Justice stated, “This is the largest single criminal healthcare fraud case ever brought against individuals by the Department of Justice.”  Mr. Esforme’s criminal defense lawyers Marissel Descalzo and Michael Pasano issued a statement that their client committed no wrongdoing, further saying, “Mr. Esformes is a respected and well-regarded businessman.”  The attorneys did not elaborate on the full scope of their client’s business activities, and did not comment on the allegations that escort and hotel services were allegedly paid for by Medicare and Medicaid in connection with services provided to patients.

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mateenNoor Zahi Salman, (the second and current wife of the Orlando shooter, Omar Mateen),  told the FBI she knew of Mateen’s plan for a mass murder shooting, accompanied him to scout out potential targets, went with him to the Pulse Club in Orlando, and accompanied him to buy a holster and ammunition.

Is that enough to charge Mateen’s wife as aiding and abetting the murders?  Can the law support a conviction?  Is arresting her a public relations issue or a law enforcement issue? These are all questions that investigators will be looking to answer in the next few days.

Decide for yourself. But first understand the law.  Aiding and abetting means “assisting in the commission of someone else’s crime.”  According to 18 U.S. Code § 2, Salman, if convicted of aiding and abetting, could be punished as a principal.

Jury instructions are the place to start reading about the elements of crimes.   I always work with clients at the start by reading jury instructions. Jurors hear the instructions at the conclusion of criminal trials.  Jury instructions are the court’s distillation of statutes and case law of the crime(s) defendants are indicted.

Read the Manual of Model Criminal Jury Instructions, 5.1 Aiding and Abetting. There are four elements that must be proven beyond a reasonable doubt. In Salman’s case, to be found guilty of aiding and abetting Mateen of murder, the first thing that must be proven is that the crimes occurred, which they did.

Second, that Salman aided in at least one element of the crime. This may be provable, if it’s true that Mateen’s wife helped him scout out the scene of the crime and went with him to procure things he needed to murder all those people.

Third, that Salman acted with the intent to facilitate the crime. What does “facilitate” mean?  Mateen’s wife must have not only associated with the person who committed the crime, but she must have helped Mateen, knowing he intended to commit a crime.  You decide if Mateen’s wife acted knowing that Mateen intended to use guns to kill people and that there still was a realistic opportunity for him to withdraw from the crime.

The fourth element to be proven is whether Salman acted before the crime was completed.

As more facts become known, you can weigh what you read in the papers and see on TV.  You can mull it over and come to your own conclusion.  But, if you are a prosecutor, you don’t mull and consider if it is a politically popular thing to do. The decision to prosecute is a decision by the U.S. Attorney and the State Attorney in Orlando.  What the prosecutor looks for is sufficient evidence to survive a judgment of acquittal at the conclusion of the government’s case.  Juries decide if the evidence meets the government’s burden of proof beyond a reasonable doubt.  Can prosecutors prove the elements of aiding and abetting the charge of murder, the murder of 49 people?  That is a jury question and that’s what jury trials do: They weigh evidence.  If you believe it is a question of proof, then you should encourage the U.S. Attorney and the State Attorney (the prosecutor’s office in Orlando) to charge Mateen’s wife with aiding and abetting.   Let the proof come out in a trial.  A jury can decide if it meets the test of proof beyond a reasonable doubt.

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Earlier this month, a Miami judge declared Florida’s revised death penalty law unconstitutional, saying jurors should agree to execution unanimously, contrary to what the new law says.

Circuit Court Judge for Miami-Dade County, Milton Hirsch, said that Florida’s new death penalty law, which enacted a “super majority” system where 10 of 12 juror votes aCopy-of-Vetoed-205x300re required to impose the death penalty for murder is contrary to U.S.’s long-time goes against the long-time precedent of unanimous verdicts regarding the death penalty cases.

Just recently in March, Florida’s legislature was forced to revise the death penalty statute after the U.S. Supreme Court declared the previous one unconstitutional in January of this year because it said it did not give jurors a significant enough role in the death penalty decision.

Under Florida’s previous death penalty statute, the trial court held two phases of the trial, which is in effect two separate trials for capital death cases. Capital death cases are all cases in which the death penalty is a possible punishment.  The first phase was, and remains, the “guilt phase.”  During the guilty phase of the trial, the State has to put evidence before the jury that all the elements of a capital homicide prosecution are met and meet the standard of “beyond a reasonable doubt.”  The death penalty can be imposed in murder cases in which the killing was done in a cruel, heinous or atrocious manner: other States and the Federal system define this element in other words as well such as “especially heinous” or “cruel” or “depraved” and/or “depraved torture.”

All those terms have been litigated up and down the court system.  A useful understanding of this element or facts that must be proved before a finder of fact can impose the death penalty is that the nature or the killing was such that it is not a fast or painless death, or the killer tortured the victim before death overcame the victim.  Death is also imposed in certain cases in which the killing is a killing for hire, or done to escape detection (killing a witness), or the killing of a special protected class of individuals such as police officers, firefighters, rescue workers, judges, prosecutors and other special classes of victims.  Each state has or includes different special classes of victims in which the death penalty can or must be imposed.

What the Judge in Miami did was to strike down the new revised law.  Formerly, once a recommendation was made by the jury, and the recommendation had to be unanimous, the Judge could then decide on his/her own to impose death or not impose death. The U.S. Supreme Court last year ruled that plan or that structure unconstitutional and struck the Florida death statutes and their manner or method for imposing death.  The “new’ plan, the one that was found unconstitutional, had the jury decide by a vote of ten jurors to impose death and took the judge out of the process.  But the Miami Judge declared that ten is not constitutional and that the decision must be the decision of all twelve of the the jurors.

Now the appeal process begins and appellate court for the Miami district, the Third District Court of Appeals, will hear the case on appeal. That appellate courts decision will then be sent to the Florida Supreme Court. The Florida supreme court’s decision will then be the law of Florida unless the U.S. Supreme Court overrules or overrides the Florida’ Supreme Court’s findings. The process can take a year or two, but in all likelihood will be expedited.

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Last month, on February 16, 2016, the U.S. Government asked a California federal court to compel Apple to assist the FBI in the search of the San Bernardino shooter,Syed Rizwan Farook’s, iPhone.  Apple has objected to doing so, claiming it has “…done everything that is both within our power and within the law to help them.”

Apple vs. FBIIn the past, Apple has complied with government search warrants, under its prior operating system, bypassing its passcode and unlocking some of its content pursuant to the warrant. But under Apple’s new encrypted software, the data is encrypted automatically using a digital key that can only be accessed by the user and not by Apple or anybody else.  And since developing the new iOS8 operating system, Apple claims in its policy that it can no longer bypass the passcode, “…and therefore it is not “technically feasible” for Apple to respond to government search warrants.  For this reason, the government’s already obtained search warrant has not been very useful and under the All Writs Act, the government is seeking assistance from Apple because they state, “Apple has the ability to modify software” to disable the auto-erase function only on Malik’s iPhone.

U.S. Magistrate Judge Sheri Pym issued an order approving the government’s petition and in response, Apple issued a statement outlining their reasons for refusing to cooperate with the FBI, stating the FBI is asking Apple to “build a backdoor” to its products, thus setting a dangerous precedent.

Although this specific case does not seek protection under the Fourth Amendment, which which protects people from unreasonable searches and seizures, Apple supporters use the Fourth Amendment to support their argument.

Amid the tsunami of reporting and op-ed opinions on this issue, it’s important to remember a key component of the 4th Amendment is the Expectation of Privacy Rule.  This standard, established in Katz v. United States is fundamental in analyzing whether a search under the 4th Amendment is reasonable or not.

The U.S. Constitutional protections against unreasonable searches and seizures and recognizes as fundamental that there is a consensus among people of what the government cannot go beyond. For example, it is reasonable to believe that what I write in my personal diary is safe from governmental intrusion.  It is not reasonable to believe that what I say on the street in an open public place is beyond the reach of a government search and cannot be used by a prosecutor in court.

So, the question here is whether it is reasonable to believe that whatever information issue on an Apple device is beyond the reach of the government’s reasonable intrusion by law enforcement agencies?  What is it about an Apple device that makes it different, constitutionally different, than, for example, cloud-based data, a physical hard drive, or a cell phone made by anyone other than Apple?  The gloss, but also correct answer is nothing makes it different.  This stands opposite to the myopic Apple world viewpoint pressed by Chief Executive Officer, Timothy Cook, from Apple.

Apple knows that it can comply with the court’s order, but is using this battle as a platform to posture itself as a champion of personal security. This an interesting, but flawed stance, since the courts will ultimately win in the battle with Apple and there is no one who can reasonably believe that a cell phone’s memory is, like a paper diary, or a conversation with one’s lawyer, beyond compromise or the reach of a warrant based on a reasonable need for law enforcement to know what a mass murdered stored in their personal iPhone.

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This week the Security and Exchange Commission (SEC) announced that E.S. Financial Services, a Miami based brokerage firm, settled what could have been a major criminal case with an agreed $ 1 million penalty payment to settle the charges and possibly avoid criminal prosecution.

The SEC issued a press release which suggested that the E.S. Financial, now known as Brickell Global Markets, Inc., committed acts that substantially violate anti-money laundering statutes and related rules.  The agreed allegations are that the brokerage firm allowed non-U.S. individuals to sell and buy securities without revealing the people who are the beneficial owners.

The SEC’s continued investigation led to their issuance of an order, which instituted a settled administrative proceeding, in lieu of a criminal indictment.  And while no fraud occurred in this case, the SEC investigation concluded that there were significant “holes” or shortcomings in the framework and implementation of the firm’s customer identification program (CIP), which required brokers to, “…at a minimum…, implement reasonable procedures to verify the identity of any person seeking to open an account.”

According to the SEC’s order, E.S. Financial maintained a brokerage account for a bank from Central America that was trading for its own benefit.  It went on to say that 13 non-United States entities, involving 23 non-U.S. citizens, were the beneficial owners of the securities involved and that more than $23 million of securities transactions were involved in the allegations.  These actions were in violation of Section 17(a) of the Securities Exchange Act of 1934. Specifically:

  • Rule 17a-3, which requires exchange members, brokers, and dealers to make and keep certain all books and records relating to its business.
  • Rule 17a-4, which requires exchange members, brokers, and dealers to preserve such required records for a prescribed period of time.
  • Rule 17a-8, which requires every broker to comply with the reporting, record keeping, and record retention requirements in regulations implemented under the Bank Secrecy Act, including the requirements in the CIP rule applicable to broker-dealers.

The anti-money laundering statutes require that non-U.S. citizens who buy, sell or beneficially own securities in the U.S. must reveal and verify their names.  This applies to any individual who is the beneficial owner or ultimate person who will own the securities.

The SEC identified that in examining the books and records of the firm, there was a failure to provide and produce the records identifying the foreign customers the firm was soliciting and or providing financial advice.

Under the SEC rules cited above, financial institutions must maintain records which adequately identify their customers.  To ensure that money launderings statutes are followed, FINRA published the Know Your Customer Rule (FINRA Rule 2090), which requires regulated brokerage firms to know with whom they are dealing.   The “Know Your Customer” Rule imposed upon financial institutions is intended to eliminate or reduce money laundering.

As part of the agreed settlement, E.S. Financial Services agreed and confirmed to the SEC that a complete review of their internal policies, practices and procedures over the next two years would be undertaken, which is in addition to the $1 million fine they agreed to pay.

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Bill Cosby was dealt a stunning setback and a legal major rebuke by a Pennsylvania state court judge this week. His lawyers filed court papers asking the judge to stop the newly renewed prosecution of three sexual assault charges filed against Mr. Cosby in Montgomery County, Pennsylvania. His argument was based in equity and basic estoppel contract law.

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Source: Denverpost.com

Twelve years ago the prosecutor from Montgomery County announced that he would not prosecute Bill Cosby on the charges.  The allegations of sexual abuse in 2004 were and are the same Mr. Cosby is currently facing. Relying on the prosecutor’s statements that no prosecution would be undertaken, Mr. Cosby moved on with his life, responded to lawsuits in civil court, made statements in that lawsuit as required, and did nothing to preserve defenses, evidence, and witnesses which he could have used in this defense had he been prosecuted 12 years ago.  Now, 12 years later, the recently elected prosecutor Mr. Kevin Steele announced that he was reopening the case. Mr. Steele in his campaign to get elected as the prosecutor in Montgomery County, Pennsylvania, featured his intent to prosecute Bill Cosby.

Mr. Cosby’s arguments which were grounded in contract and equity law did not resonate with Judge Steven O’Neil. Judge O’Neil denied Bill Cosby’s motion to stop the prosecution and gave the prosecutor a green light to proceed in the criminal courts. The incident in question arose in 2004. The allegations are that Mr. Cosby provided unidentified mood altering or intoxicating pills to a Temple University basketball employee, a female, and then allegedly penetrated her with his fingers. Mr. Cosby maintained then, and now, that the sexual contact was consensual, willing and voluntary on the part of both him and the purported victim.

The defense argues that former prosector, Bruce Castor, made an oral agreement not to prosecute Bill Cosby.  In argument, Mr. Cosby’s attorney prominently displayed a newspaper press release by the then prosecutor clearly announcing his intention not to prosecute Mr. Cosby. The prosecutor, Mr. Castor, actually wrote the release himself in his capacity as district attorney.

Legal observers believe that this situation and its current resolution are ripe for appeal. Prosecutorial discretion is a historically protected power and has been largely exempted from judicial review.  The exceptions, where a court will intervene and bar or stop a prosecution, are for bad faith prosecutions and those which are motivated by malice or pursued for improper purposes.  The politics of prosecution argument which is highlighted here, opens the door to arguments of abuse of discretion and improper motivation. The next step in the process of the now active prosecution, is a preliminary hearing.  In this hearing, the state must put forward testimony and evidence to establish a pattern of such behaviors by Mr. Cosby, and to demonstrate a good faith fact based prosecution is being undertaken.  The prosecutor must present competent evidence to prove the charges. This next step will be the focus of future reviews by this writer. There are significant implications and issues in play here.  The focus is on whether a person who is accused in the public domain of a crime who relies on statements of a prosecutor can bar  future  prosecution.  Where it ends is anyone’s guess but it certainly will make new law.

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Source: irs.gov

On January 27, 2016, the Department of Justice Office of Public Affairs issued a press release announcing its victory in a Virginia federal court where a gas station owner pleaded guilty to a charge of conspiracy to defraud the United States in what appears to be a renewed effort to prosecute tax evasion cases by the Internal Revenue Service (IRS).

In this case, the defendant, Obayedul Hoque, owned a gas station and several Subway franchises in Alexandria and Arlington, Virginia, as well as in Washington, D.C. According to the criminal investigation division, the owner and co-conspirators, admitted to not depositing all of their gross receipts into the company accounts, and thus failed to report and pay taxes on a significant portion of their sales.

From 2008 to 2013, the co-conspirators falsely reported the franchise’s sales at $14,377,696, although the true and correct sales for the franchise were $20,805,667. The defendant admitted that as a result of the false reporting to the IRS, they failed to pay between $1.5 million and $3.5 million in taxes to the IRS.

The prosecution in this case proceeded under 26 U.S. Code § 7201, Attempt to Evade or Defeat Tax and the sentencing of the defendants has been put off to May 2016.  For this charge, the defendant faces a prison term of up to five years and a fine of up to $250,000 and under the plea agreement, he agreed to pay restitution to the IRS for the tax liability.

Under the federal criminal tax code, it is a felony for any person to willfully attempt to evade or defeat any tax imposed by or under relevant federal law. It is also a felony under federal criminal law to fail to collect, account for, and pay any tax imposed under the federal code. Federal tax fraud cases are also prosecuted for underpayment or failure to pay estimated tax as required by law.

The most important and most often cited federal court decisions concerning tax evasion in the United States define tax evasion and tax fraud in the same language. Tax evasion and tax fraud is the purposeful illegal attempt by the taxpayer to evade assessment or payment of any tax imposed by federal law. Tax evasion is different from tax avoidance. Tax avoidance is the legal utilization of the tax and taxation laws to one’s benefit. The reduction of tax liability through tax avoidance is not illegal. It is a federal criminal act to fail to report and or fail to pay taxes which are imposed by law.

Chief Richard Weber of the IRS Criminal Investigation Unit said, “Today’s plea of Obayedul Hoque for conspiracy to defraud the United States sends a clear message to would-be tax cheats.  U.S. citizens expect and deserve a level playing field when it comes to paying taxes and there are no better financial investigators in the world when it comes to following the money.”  And because of this apparent renewed effort by the IRS, regional U.S. Attorney offices, including here in Fort Lauderdale and in Miami, are under increased pressure to prosecute for tax fraud.

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