TAX FRAUD & MONEY LAUNDERING
University of Houston Law Center

Summary of Course

This course deals with tax crimes and some of their companion crimes.   The class will cover the following subjects:

• traditional tax crimes (evasion, subscribing a false return, etc.) and their frequent companions (e.g., conspiracy, obstruction, etc.);
• similar ground for the recent initiatives designed to curb drug and organized crime activity, including cash reporting requirements and money laundering crimes, although this will not be a principal focus of the class;
• the issues, defenses and strategies that normally attend such criminal initiatives;
• the Government's various initiatives to discover and combat criminal behavior in this context, including IRS investigations, task force investigations, grand jury investigations and various other methods employed by the Government.

Course Materials

The Book for this class is Townsend, Campagna, Johnson & Schumacher, Tax Crimes (Lexis-Nexis 2008).   There is a supplement available for download here.  In addition, I will post Update, Errata and Other Materials.  These should be reviewed periodically for important recent updates and corrections to the text (errata).

Note to Students:  Jack Townsend makes available for download a free book called Federal Tax Crimes.  We do not recommend it to students taking this class because (i) it is substantially longer than the assigned text, (ii) it is less focused on the needs of the student for this class, and (iii) most importantly, it has not benefited from the efforts of multiple authors from which the assigned text has benefited greatly.  For those students desiring to download the book, please go to Jack's firm download page by clicking here.

Student Information

Information - Introductory Information for the Class

Student Questionnaire - Students who have not yet filled this in should do so ASAP.  The pdf file can be completed and emailed by clicking in the upper right hand corner of the pdf file.  Alternatively, you can fax the completed form to Jack Townsend at 713-893-2509.

Spring 2010 Course Schedule

(Class time is 5:30 - 7:10 pm)

Assignments for Classes   (Please note that the assignments are approximate and may vary as we move through the materials).  Please note that updates will be posted on the web site and sent to the members of the class by email.

Class 1 1/24	Introduction to Class Ch. 1 Overview of the Criminal Tax System, pp. 1-18 Ch. 1 Update Items
Class 2 1/31	Ch. 2A Crimes Under the Internal Revenue Code - Tax Evasion, pp. 19 - 54 Ch. 2A Update Items
Class 3 2/7	Ch. 2B Crimes under the Internal Revenue Code - Other Offenses,  pp. 57 - 96 Ingredient Technology p. 61 - Baker, Campbell, Conzalez, U.S. v. Kelly p. 70 - Hasan, Moheb, Munson, Nwachukwu U.S. v. Kassouf p. 72 - O'Neil, Picton, Spellman, Thomas U.S. v. Evangelista p. 80 - Turpen, Warley, Currin Reminder: Compete and Return the Questionnaire - click here. Ch. 2B Update Items
Class 4 2/14	Ch. 3 Crimes Outside the Internal Revenue Code, pp. 97 - 126 Ch. 3 Update Items Case Assignments:   United States v. Krasovich (p. 100) - Baker, Campbell, Conzalez, Currin, Hasan, Gonet, Moheb   United State v. Caldwell (p. 107) - Munson, Nwachukwu, Spellman, Thomas, Turpen, Warley
Class 5 2/21	Ch. 4 Methods of Proof, pp. 127 - 157 Ch. 4 Update Items Case Assignments:    United States v. Tarwater (p. 129) - Moheb, Turpen    Holland v. United States (p. 134) - Munson, Nwachukwu    Taglianetti v. United States (p. 138) - Baker, Hasan,    United States v. Esser (p. 141) - Campbell, Conzalez, Currin,     United States v. Black (p. 144) - Warley, Gonet    United States v. Pree (p. 147), United States v. Sabino (p. 148); & United States v. Bishop (p. 149)  -  Spellman, Thomas    United States v. Tarwater (p. 150) - Moheb, Turpen    United States v. Silkman (p. 155) - Warley, Spellman
Class 6 2/28	Ch. 5 Prosecution Policies and Affirmative Defenses, pp. 159 - 182 Ch. 5 Update Items Ch. 6 Investigation and Development of Criminal Tax Cases, pp. 183 - 197 Ch. 6 Update Items Case Assignment:    Sansone (p. 166) - All Class Members
Class 7 3/7	Ch. 6 Investigation and Development of Criminal Tax Cases (cont.), pp. 197 - 220 Ch. 6 Update Items Ch. 7 Government Information Gathering, 221 - 232 Ch. 7 Update Items Case Assignments:    Tenzer (p. 207) - Baker, Campbell, Conzalez, Currin, Gonet, Hasan, Moheb, Munson    Lefkowitz (p. 229) - Nwachukwu, O'Neil, Picton, Spellman, Thomas, Turpen, Warley
Class 8 3/21	Ch. 7 Government Information Gathering, 232 - 252 Ch. 7 Update Items Ch. 8 Pre-Trial Issues in Criminal Tax Cases, 253 - 274 Ch. 8 Update Items
Class 9 3/28	Chs. 7 & 8 Conclude with discussion of Problems from the Chapters. Ch. 9 Trial and Post-Trial, pp. 277 - 299 Ch. 9 Update Items Case Assignments:    Johnson (p. 286) - Baker, Campbell, Conzalez, Gonet, Hasan, Moheb, Thomas    Evangelista (p. 288) - Turpen, Warley, Currin, Moheb, Nwachukwu, Picton, Muson, O'Neil,
Class 10 4/4	Ch. 10 Sentencing in Tax Cases, 301 - 339 Case Assignments:    Mistretta (p. 308) - Baker, Campbell, Conzalez, Currin,    Booker (p. 311) -Gonet, Hasan, Moheb, Munson    Chavin (p. 323) - Nwachukwu, O'Neil, Picton, Spellman    Harvey (p. 327) - Thomas, Turpen, Warley Ch. 10 Update Items
Class 11 4/11	Ch. 11 Ethical Issues in Criminal Tax Practice, pp. 331 - 358 Case Assignments    United States v. Locascio (p. 345) - Baker, Conzalez, Gonet, O'Neil    Paratechnologies Trust v. Commissioner (p. 349) - Campbell, Currin, Hasan, Spellman, Turpen    Lefcourt v. United States (p. 353) - Moheb, Nwachukwu, Picton, Thomas, Warley Ch. 11 Update Items
Class 12 4/18	Ch. 12 Major Collateral Issues, p. 361 - 373 Ch. 12 Update Items Ch. 13 Civil Tax Considerations, pp. 377 - 392 Ch. 13 Update Items
Class 13 4/25	SEE CLASS FUNCTION FOR 4/29; THERE WILL BE SOME TYPE OF ASSIGNMENT FOR THE FUNCTION
Class 13 4/29	Class Function (in lieu of class on 4/25) Spouses, significant others, etc. are invited (only one per class member so as to not create a ruckus between a spouse and a significant other) Time:  7:00pm.  Address:  2340 Albans Rd. (Map here).  Directions from hwy 59 (SW Freeway):  Go south on Greenbriar toward Rice University.  Go through the red light at Bissonnet.  The second cross street after Bissonnet is Albans.  Take a right on Albans.  We are toward the end of that block on the North (right) side of Albans.
Class 14 5/2	Ch. 14 Putting It All Together, pp. 395 - 411 Ch. 14 Update Items Examination Review
Exam 5/9 6:00 - 8:00 PM	213 BLB

Past Examinations.  For viewing or download.

 Miscellaneous Notes to Students

• Study hard.

Excerpts from Examinations: Students Say the Darndest Things

These are some excerpts from students' answers to the 1997 examination. The students are anonymous to me in the grading process, so I don't know who gave these answers.

• In response to question regarding options after T has committed numerous potential offenses in question 1: "Well he can always flee the country to another without an extradition treaty with the US, but I wouldn’t recommend it (especially since the IRS could just abduct him back)."
• In response to question invoking a voluntary disclosure response: "I would recommend that Mr. Jones pay the back taxes in a voluntary disclosure & pray that the IRS does not prosecute." (JAT Note: I personally believe that prayer is good for the soul, but do not include that as a strategy in this course.)
• In response to avoiding producing the confidential diary containing the code to his drug dealing proceeds (question 3), one student wrote:

I think the practical solution is this: Jones should burn his original diary. The IRS doesn’t know of its existence and Jones sure as hell isn’t gonna tell them about it. So he should be able to avoid obstruction charges (provided his psychiatrist is the only other party who knows of the diary’s existence.) Then when the IRS asks the Dr. for his copy of correspondence from Jones, the psychiatrist can rightly refuse, citing the client-patient privilege. I really think this should hold up. The privilege is legit, and the papers were obtained by the doctor in the course of treatment for treatment purposes. Although it may border on the unethical, I think the client’s neck, in this instance, demands disposal of the original. (Of course, the atty-client privilege may be waived here under the crime-fraud rule if the advice is "obstruct-justice." But if the initial meeting and discussion were generally enough phrased, I think the professional responsibility teachers would agree with me."

JAT Comments: Some things do not require comment, but this answer does suggest that we spend a bit more time on ethics and illegal conduct on the part of the practitioner.

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