An entry on the TaxProf Blog discusses the Department of Justice’s decision to dismiss a civil case against xélan, Inc. that involved over 3,500 San Diego-area doctors and dentists involved in allegedly fraudulent tax shelters. After trumpeting the filing of the civil action and the entry of a TRO freezing the company’s assets, the TRO was subsequently lifted and last week, with much less fanfare (i.e. none), the DoJ dismissed the civil case. Professor Caron describes the decision to dismiss the case as a "stunning reversal."
Category: Tax
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In this a.m.’s NYTimes is an article titled, Man Sentenced in Tax Schemes Also Releases Data on Lawyers. Several items are of interest in what the NYTimes describes as the case of "the nation’s most prominent seller of offshore banks in tax evasion schemes," being "sentenced yesterday to six months in prison by a federal judge in San Francisco."
First is that the defendant is unhappy with the sentence, believing that the government promised him that they would argue for no jail time. His response- I won’t cooperate. Obviously, one wonders if the government reneged on its promise? But one also has to wonder if the government was really flipping the person at the top with no jail time to get at his clients.
That leads to the second question – who is the government really going after in this investigation?
FInally, the article talks about a lawyer’s name appearing on the documents. The young associate says first he has no knowledge, but amends his remarks when told that his name is at the bottom of the document.
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The Supreme Court heard oral arguments this week in the case of Pasquantino v. United States. This is a wire fraud (18 U.S.C. 1343) case emanting from the Fourth Circuit. The defendants "were convicted of using interstate wires for the purpose of executing a scheme to defraud Canada and the Province of Ontario of excise duties and tax revenues relating to the importation and sale of liquor."
Oddly enough many newspapers seem to be omitting discussion of this case. They shouldn’t – as this case may set the tone for how far the government can go with extraterritorial prosecutions.
The Baltimore Sun, in an article titled "High Court Hears Smuggling Case Involving Liquor From Maryland," notes how some justices were concerned about the possibility that the U.S. might punish the defendants, and then another country (Canada in this case) might also proceed against them for the same conduct. This is a legitimate concern, since if the positions were reversed the U.S. would be able to proceed because of the dual sovereignty rule. So the net result is that we could have countries all prosecuting the same person for the same crime.
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MattBray.net 