I picked up this news item from the Tax Prof Blog entry, Husband Of Retired Tax Court Judge Pleads Guilty To Taking $1 Million In Fraudulent Deductions (Tax Prof Blog 9/26/16), here, which linked to a newspaper report, Paul Walsh, Twin Cities husband of ex-tax judge admits duping IRS; charges against her pending (Star Tribune 9/26/16), here.
Law360 reports on the change of plea, Kat Greene, Ex-Judge's Husband Says They Conspired To Cheat On Taxes (Law360 9/23/16), here, but since I do not have a subscription, I could read only the first few lines which read:
Retired U.S. Tax Court Judge Diane Kroupa conspired with her husband to make phony tax returns that heaped hundreds of thousands of dollars in personal expenses into his business account for deduction, her husband told prosecutors as part of his plea agreement Friday.
Robert E. Fackler admitted to obstructing an Internal Revenue Service audit of the pair’s tax returns during a plea hearing in Minnesota federal court on Friday, prosecutors said. Fackler told prosecutors that his wife, a tax judge, prepared summaries of personal expenses to...I don't have the plea colloquy so don't know what Fackler said other than guilty to the plea of tax obstruction, Count 6. Oten in plea colloquies, the defendant is required to or does admit his pattern of conduct which would include closely related offenses. In this case, there is a parallel between tax obstruction in § 7212(a) and the defraud / Klein conspiracy in 18 USC § 371, here. The defraud / Klein conspiracy is generally formulated as a conspiracy to impair or impede the lawful functions of the IRS, which is basically what tax obstruction is (and, for that reason, tax obstruction has been described as a one person defraud / Klein conspiracy). The key difference is that tax obstruction can be charged without regard to whether there was a conspiracy and has a 3-year maximum sentence rather than 5-years for the defraud / Klein conspiracy.
I will await the plea agreement and perhaps some more information about what happened at the plea colloquy to post more on it. I will note here that, if the tax loss is as alleged -- at least $400,000, so that with relevant conduct, it will likely exceed $400,000 -- for the years charged, the indicated sentencing range with sophisticated means and acceptance of responsibility is 30-37 months, so the judge with a 3 year count will be able to impose the Guidelines sentence and may well do a Booker downward variance.
There is no information as to whether he will have to cooperate in the continuing prosecution of his wife. The indication is that they are in the process of getting a divorce, so it may well be that cooperation was a price he had to pay and was willing to pay.
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