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

Exam Topic Exclusions

Course Materials

The Book for this class is Townsend, Tax Crimes (2007 ed.).   Note to other than UH Law Students: I ask those downloading to advise me by email that they have downloaded the book and the expected use.  I also ask that, if you find any portion of the book that you believe to need correction or clarification, please advise me at the same email address. 

Downloads and Links: 

Townsend on Tax Crimes (2007 ed.)

TIGTA Report on IRS Criminal Investigation ("CI") Statistics (May 2006).

Sentencing Guidelines.  Please visit the Sentencing Commission web page for copies of the Sentencing Guidelines and related materials:  http://www.ussc.gov/

Lucien B. Campbell and Henry J. Bemporad, An Introduction to Federal Sentencing (9th ed. April 2006) (Good recently updated summary discussion of the Guidelines).

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 2005 Course Schedule.

(Class time is 7:30 - 9:10 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 1/17/07	Introduction, Credits and Methodology (pp. i-i) and Ch. 1 Introduction (1 - 19)
Class 2 1/23/07	Ch. 2, I. A. Tax Evasion (pp. 20-74) Ch. 2  I. B.  Tax Perjury (pp. 74-85) Specific Case Assignments:    Spies (p. 22) -  Adeyemi, Barnes, Cmaidelka    Beacon Brass (p.20) - Diep, Ervin    Pomponio (p. 32) - Giddings, Gray, Griepp    Cheek (p. 34) - Hanningan, Lorenz Muldrow    Ingredient Technology (p. 79) - Shah, Tees Thomas, Wells    Gaudin (p. 81) - [Unassigned]
Class 3 1/30/07	Ch. 2, I. C.  Aiding and Assisting (pp. 85-87 ). Ch. 2, I. D. Corruptly Impeding Administration (Omnibus Clause) (pp. 87- 99) Ch. 2, I. E. Failure to File, Keep Records, etc. Collect and Pay over (pp. 99-103 ) Ch. 2, I. F.  Failure to Collect, Pay Over (pp. 103 - 111 ) Ch. 2, I. G. Fraudulent Returns, Statements or Other Documents (pp. 111-113) Ch. 2, I. H. Currency Transaction Reporting (§ 6050I) (pp. 113-115 ) Ch. 2, I. I. More on Substantiality and Materiality (p. 115-117) Specific Case Assignments:    Reynolds (p. 83) &   Pirro (p. 83) - Adeyemi, Diep, Griepp, Shah    Kelly (p. 92) - Barnes, Ervin, Hannigan, Tees    Kassouf (p. 95) & Bowman (p. 98) - Cmaidelka, Giddings, Lorenz, Thomas    Evangelista, p. 106). - Gray, Muldrow, Wells
Class 4 2/6/07	Ch. 2, II. Traditional Non-Tax Crimes. (pp.  117-184) Ch. 2, III. War on Crimes. (pp. 185-205) Specific Case Assignments:   Alston, p. 150 - Gray, Muldrow, Wells   Bronston, p. 162 - Cmaidelka, Giddings, Lorenz, Thomas    Brogan, p. 166-Barnes, Ervin, Hannigan, Tees, Ochoa   Pasquantino - p. 179 - Adeyemi, Diep, Griepp, Shah
Class 5 2/13/07	Ch. 3 I. Introduction (pp. 206 & 207) Ch. 3 II.  Sentencing, Including Sentencing Guidelines (pp. 208- 267) Specific Case Assignments:    Watts, p. 243. - Thomas, Hannigan, Diep, Adeyemi, Lorenz, Hannigan    Kontny, p. 247  - Tees, Griepp, Ervin, Shah, Gray, Ochoa    Booker (?) (May be added later) - Barnes, Giddings, Muldrow, Wells
Class 6 2/20/07	Ch. 3 - Reprise on the Guidelines (no new materials to read) Ch. 3 - III. Pleas and Plea Negotiations, (pp. 267-291) Ch. 3 - IV. Lesser Included Offenses (pp. 291-303) Ch. 4 - Other Consequences (pp. 304-331) Specific Case Assignments:     Sansone, p. 294. - Barnes, Giddings, Muldrow, Wells, Ochoa     Gricco & Gambone, pp. 301 and 302, respectively - Tees, Griepp, Cmaidelka, Ervin, Shah, Gray     Caplin & Drysdale, p. 311 - Thomas, Hannigan, Diep, Adeyemi, Lorenz, Hannigan
Class 7 2/27/07	Ch. 5 - Statutes of Limitation (pp. 332-346) Ch. 6 - Venue (pp. 347-351) Ch. 7 - Enforcement Strategies, Policies and Practices (pp.352-380) Specific Case Assignments:     King, (p. 334) - Thomas, Hannigan, Diep, Adeyemi, Lorenz, Hannigan, Muldrow, Wells, Ochoa     Grunewald & LaSpina (pp. 340 and 341, respectively) - Tees, Griepp, Cmaidelka, Ervin, Shah, Gray, Barnes, Giddings
Class 8 3/6/07	Ch, 8 - Information Gathering Techniques (pp. 381-412) Ch. 9 - Mitigating the Damage (pp. 413-476)  (go through II.B., Fifth Amendment Privilege) Specific Case Assignments:    Sullivan/Garner/Neff cases (beg. on p  414-418) - Adeyemi, Barnes, Cmaidelka    Tenzer (p. 430) -  Diep, Ervin, Ochoa    In re Grand Jury (p. 447) - Hanningan, Lorenz Muldrow    Hubbell (p. 451) - Shah, Tees Thomas, Wells    Kastigar (p. 461) - Giddings, Gray, Griepp
Class 9 3/20/07	Ch. 9 - (cont.)    II. Privileges       C.  Accountant Privilege (cont. beginning on p. 476-482)       D.  Attorney Client Privilege (pp. 482-502)       E.  Work Product Privilege (pp. 502-509)       F.  Joint Defense Agreements (pp. 509-517) Specific Case Assignments:    Arthur Young (p. 476) - Giddings, Gray, Griepp    Bornstein (p. 490) - Hanningan, Lorenz Muldrow    Frederick (p. 493) - Shah, Tees Thomas, Wells    Adlman (p.502) - Diep, Ervin, Ochoa    Adlman II (p. 502) - Adeyemi, Barnes, Cmaidelka
Class 10 3/27/07	Ch. 9 - (cont.)    III. Capitalizing on Government Mistakes (pp. 517-527)    IV. Discovery of the Government's Case (p. 527-532)     V. Delay in Obtaining Information (p. 532) Ch. 10 - Proof Issues (pp. 533-566) Specific Case Assignments:    Payner (p. 518) - Diep, Ervin, Ochoa    McKee (p. 521) - Shah, Tees Thomas, Wells    Siravo/Tarwater (pp. 536 & 537) -  Adeyemi, Barnes, Cmaidelka    Holland (p. 541) - Hanningan, Lorenz Muldrow    Silkman (p. 561) - Giddings, Gray, Griepp
Class 11 4/3/07	Ch. 11 The Process - A to Z (pp. 567-617)
Class 12 4/10/07	Student Evaluation of Professors (at beginning of class) Ch.  11 (continue and complete) Ch. 12 - Some Policy Issues (pp. 618-621)
Class 13 4/17/07	Review Campagna Article on Civil-Criminal Whipsaw USA Today Article on Decline in Criminal Prosecutions TIGTA Report on IRS Criminal Investigation ("CI") Statistics (May 2006).  The report is concerned with the extent of the criminal enforcement program and efforts. The report is 48 pages long so I recommend reading only the cover memorandum at the beginning (3 pages) and the body of the report (pp. 1-10 in the report). You do not have to read the balance of the report. I should note that the statistical information presented in the charts in Appendix 5 is quite informative, but, given your other priorities, I do not recommend that you spend any significant time on the charts. For updated information about where the IRS and DOJ are in their respective criminal enforcement efforts, I have posted on the web site a USA Today article for today. DOJ Tax AAG Report to Congress on Recent Activity (4/12/07)
Class 14 4/24/07	Will meet if necessary; otherwise moved to Class Function on 4/27/07 where all Tax Fraud Questions will be fully vetted in a casual atmosphere.
4/27/07	Class Function - 2340 Albans commencing at 7:00pm
Exam 5/2 - 5/10 TBA	Examination

Update and Other Materials.   These should be reviewed periodically for important recent updates and corrections to the text (errata). 

Past Examinations.  For viewing or download.

 Miscellaneous Notes to Students

• Study hard.
• The materials for this class are a first edition (really a beta edition) of materials I have prepared.  I would appreciate your comments.

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."

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

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