If you believe that you may be the target of a federal investigation, DO NOT make the mistake of answering any questions without first retaining a competent lawyer who specializes in federal economic crimes defense.
There are two types of investigations for income tax violations . One type is an IRS administrative investigation. The investigation is conducted by special agents of the criminal investigation division of the IRS. The agents confer with IRS civil lawyers from the district or regional counsel's office regarding legal issues. At the conclusion of the administrative investigation, the special agents prepare a report that summarizes the results of the investigation. If the evidence establishes one or more violations of the tax laws, the agents may request leave to seek an indictment of the taxpayer. At that time, the Department of Justice Tax Division will review the report and determine if it is consistent with the national policy of the government to authorize the prosecution of the case. The review will be affected by the evidence.
The second type of investigation is an investigation conducted by a grand jury. The grand jury is convened and an Assistant United States Attorney will assist the grand jury. Internal Revenue Service Criminal Investigation Division special agents will also assist the grand jury. The Assistant United States Attorney will prepare an indictment for the grand jury to approve and execute that alleges the tax violations based upon the evidence presented to the grand jury during its investigation. A taxpayer should avoid appearing before a grand jury to testify on his or her case.
Counsel for the taxpayer may request a meeting with the Department of Justice lawyer assigned to the case before authority to indict has been granted. The Department of Justice lawyer will disclose limited information to taxpayer's counsel. This information is generally limited to code sections of the alleged violations, the amount of tax loss, and the tax years in issue. Counsel for the taxpayer will be asked what evidence the taxpayer wants to present to support the taxpayer's position that the government should not proceed to prosecute the case.
This is a very dangerous point in the case. If taxpayer's counsel reveals information pointing out perceived weaknesses in the government's case but, is unsuccessful in convincing the Department of Justice lawyer to stop the prosecution of the case, the government will be better prepared for trial. This will make it even more difficult for the taxpayer to prevail at trial.
Inexperienced tax lawyers often make mistakes at these meetings that adversely affect the taxpayer's chance to win. Often these errors go unrecognized. Further, a taxpayer should avoid discussing an matter with an agent or lawyer of the government during the investigation or. Another common mistake made by inexperienced lawyers and accountants during a criminal tax investigation is the filing of amended tax returns. These returns are often not permitted to be introduced into evidence at trial to proof the taxpayer innocent. However, they are often used by the IRS to prove that the tax returns initially filed were false and that a substantial amount of tax was due and owing. This is an essential element of an income tax evasion case under Section 7201 of the Code. The damage that can occur from filing amended tax returns during a criminal investigation can be devastating to the taxpayer's chances to prevail at trial. In summary, inexperienced lawyers and accountants can inadvertently damage the taxpayer's opportunity to prevail at trial in criminal tax cases.
Criminal investigations should never be treated by the taxpayer or his representatives as a civil audit. It should be remembered that the job of a special agent is to collect evidence in order to indict and convict the target of the investigation. The agents are trained to be friendly to get the taxpayer and witnesses to talk and provide them information they need to make a criminal case. However, they can also quickly become angry and intimidating to get the taxpayer or witness to talk, if they determine that this is necessary to get the job accomplished.
The IRS reports that it is successful in obtaining a conviction in over 93% of the cases that are indicted. The number of investigations initiated during 2013 was 5,314. The Internal Revenue Service’s Criminal Investigation Division (“CI”) is the only federal law enforcement agency with jurisdiction over federal tax crimes. A criminal tax case may take several years to investigate, indict, and go to trial. For 2015, CI again boasted the highest conviction rate in all of federal law enforcement — 93.2%. The data for the past 6 six years is as follows:
FY2015 FY2014 FY2013 FY2012 FY2011 FY2010
Investigations Initiated 3853 4297 5314 5125 4720 4706
Prosecution Recommends 3289 3478 4364 3701 3410 3034
Informations/Indictments 3208 3272 3865 3390 2998 2645
Convictions 2879 3110 3311 2634 2350 2184
Sentenced 3092 3268 2812 2466 2206 2172
Percent to Prison 80.8% 79.6% 80.1% 81.5% 81.7% 81.5%
The conviction rate for FY 2015 was 93.2%
The conviction rate for FY 2014 was 93.4%
The conviction rate for FY 2013 was 93.1%
The conviction rate for FY 2012 was 93.0%
The conviction rate for FY 2011 was 92.7%
During the past 17.5 years (1999 through 2016) 199 taxpayers won their criminal tax trial and were found NOT GUILTY on all counts. The Department of Justice, Tax Division has three regions: Western, Northern, and Southern.
Sixty two (62) of the taxpayers that were found Not Guilty on all counts were in the Northern Region: Michigan, Ohio, Kentucky, Pennsylvania, New York, Vermont, New Hampshire, Maine, Massachusetts, Rhode Island, Connecticut, New Jersey, Delaware, and Maryland.
Fifty six (56) of the taxpayers that were found Not Guilty on all counts were in the Western Region: Washington, Oregon, California, Nevada, Arizona, Utah, Colorado, Oklahoma, Kansas, Nebraska, Wyoming, Idaho, Montana, North Dakota, South Dakota, Minnesota, Wisconsin, Iowa, Illinois, Indiana, Hawaii, and Alaska.
Eighty one (81) of the taxpayers that were found Not Guilty on all counts were in the Southern Region: New Mexico, Texas, Louisiana, Arkansas, Missouri, Tennessee, Mississippi, Alabama, Florida, Georgia, South Carolina, North Carolina, Virginia, and West Virginia.
There are 354,771 active licensed lawyers in the Southern Region. Less than 1% of these lawyers have ever won a criminal tax case for the defense.
Out of the 354,771 active lawyers in the Southern Region, one lawyer, David M. Garvin, represented approximately 10% of the 81 taxpayers that won their criminal tax jury trial during the past 17.5 years. These taxpayers were found Not Guilty on all counts. David M. Garvin represented the following taxpayers in the Southern Region during this period of time.
Taxpayer’s Name Case No. Verdict Date Verdict
1. Charles T. Unkle 98-398 01-28-1999 Not Guilty All Counts
2. Terry Elliott 98-511 06-14-1999 Not Guilty All Counts
3. Demetrios Armadoros 04-20190 06-17-2004 Not Guilty All Counts
4. Helio Castroneves 08-20916 04-17-2009 Not Guilty All Counts
5. John P. Miller 12-CR-60025 09-04-2012 Not Guilty All Counts
6. Julio Robaina 13-20346 04-29-2014 Not Guilty All Counts
7. Raiza Robaina 13-20346 04-29-2014 Not Guilty All Counts
8. Noe Mompoint 15-20258 01-25-2016 Not Guilty All Counts
In addition, during this period of time, David M. Garvin represented several taxpayers that were investigated for tax violations by the Criminal Investigation Division and upon meeting with the Department of Justice, Tax Division lawyers and/or the United States Attorney assigned to the case David M. Garvin was able to get the criminal case killed and referred back to the civil division of the IRS. This is a testament to the review system and the integrity of the lawyers assigned by the government to review tax cases.
Representative cases of David M. Garvin that were killed after investigation but before trial are:
1. Investigation of taxpayer Ary Krau; and
2. Investigation of taxpayer Kemal Arin.
Because less than 1% of the licensed lawyers have won (Not Guilty on all counts) a criminal tax trial for the defense, there is no margin of error afforded a taxpayer who intends to go to trial in a criminal tax case and prove his or her innocence.
Mr. Garvin has also obtained not guilty verdicts in a number of his cases for clients who were not indicted for alleged tax violations. Examples of those cases are:
U. S. v. Timothy Parkes, 09-0038-001 (alleged bank fraud, found not guilty on all counts); and
State v. Auther E. Teele, Jr. 04-26073 (alleged corrupt interference with political corruption investigation, found not guilty on all counts).
When you are the target of an IRS criminal investigation, retaining a criminal tax lawyer who has actually gone to trial in numerous criminal tax cases and has obtained complete acquittals (Not Guilty Verdicts on All Counts) is imperative. There are a lot of competent tax attorneys that have no concept as to how to try a federal criminal trial. Likewise, there are a lot of competent criminal lawyers who know how to try a case but, have no knowledge of the tax laws. When these lawyers are hired by a taxpayer they often limit their defense of the taxpayer to the issue of willfulness. This routinely results in the defense lawyer ultimately recommending that the client accept a plea agreement which requires the taxpayer to plead guilty to a felony. An experienced successful criminal tax lawyer knows that a defense based upon willfulness is a defense of last resort and is seldom sufficient to achieve not guilty verdicts on all counts.
Some taxpayers look at the statistics and become overwhelmed with a feeling that maintaining their innocence is futile and obtaining justice from a jury trial is hopeless. However, fortunately there are taxpayers who have the fortitude to go to trial to prove their innocence and share the spirit of the late great Winston Churchill, who once said:
The course of history was influenced and the free world was saved by persons of similar courage in the face of overwhelming odds. In the context of a criminal tax case, when winning means everything, the selection of an experienced winning lawyer is crucial.
There is no substitute for common sense. If you ask the average person the following questions they almost unanimously give the following answers.
Q: If you needed heart surgery, would you hire a doctor who had never
successfully performed heart surgery before, to perform your surgery?
Q: If you needed to build a house, would you hire a contractor who had
never successfully built a house before, to build your house?
Q: If you needed a pilot to fly you to a meeting, would you hire a pilot
who had never successfully flown an airplane, to fly you to your meeting?
These common sense answers beg the question:“Why would you hire a lawyer, who has never won a criminal tax trial for the defense, to defend you in a criminal tax investigation or trial?”
You have the absolute right when selecting a lawyer to ask for the names of the cases and the case numbers of the cases which resulted in Not Guilty on all counts verdicts. Do your homework as if your very liberty depends upon it. Because it may!
David M. Garvin is a renown Florida Bar Certified Tax Lawyer. He holds a LLM in taxation and is also a CPA. Mr. Garvin’s law offices are located in Miami, Florida. His practice concentrates on federal white collar crimes defense including criminal tax cases. Mr. Garvin accepts cases nationwide.
The practice areas of the Firm include the following federal tax crimes:
Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.
Any person required under this title to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution.
Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 1 year, or both, together with the costs of prosecution.
In the case of any person with respect to whom there is a failure to pay any estimated tax, this section shall not apply to such person with respect to such failure if there is no addition to tax under section 6654 or 6655 with respect to such failure.
In the case of a willful violation of any provision of section 6050I, the first sentence of this section shall be applied by substituting "felony" for "misdemeanor" and "5 years" for "1 year".
In lieu of any other penalty provided by law (except the penalty provided by section 6674) any person required under the provisions of section 6051 to furnish a statement who willfully furnishes a false or fraudulent statement or who willfully fails to furnish a statement in the manner, at the time, and showing the information required under section 6051, or regulations prescribed thereunder, shall, for each such offense, upon conviction thereof, be fined not more than $1,000, or imprisoned not more than 1 year, or both.
a) Withholding on wages Any individual required to supply information to his employer under section 3402 who willfully supplies false or fraudulent information, or who willfully fails to supply information thereunder which would require an increase in the tax to be withheld under section 3402, shall, in addition to any other penalty provided by law, upon conviction thereof, be fined not more than $1,000, or imprisoned not more than 1 year, or both. (b) Backup withholding on interest and dividends If any individual willfully makes a false certification under paragraph (1) or (2)(C) of section 3406(d), then such individual shall, in addition to any other penalty provided by law, upon conviction thereof, be fined not more than $1,000, or imprisoned not more than 1 year, or both.
Any person who - (1) Declaration under penalties of perjury Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; or (2) Aid or assistance Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document; or (3) Fraudulent bonds, permits, and entries Simulates or falsely or fraudulently executes or signs any bond, permit, entry, or other document required by the provisions of the internal revenue laws, or by any regulation made in pursuance thereof, or procures the same to be falsely or fraudulently executed, or advises, aids in, or connives at such execution thereof; or (4) Removal or concealment with intent to defraud Removes, deposits, or conceals, or is concerned in removing, depositing, or concealing, any goods or commodities for or in respect whereof any tax is or shall be imposed, or any property upon which levy is authorized by section 6331, with intent to evade or defeat the assessment or collection of any tax imposed by this title; or (5) Compromises and closing agreements In connection with any compromise under section 7122, or offer of such compromise, or in connection with any closing agreement under section 7121, or offer to enter into any such agreement, willfully - (A) Concealment of property Conceals from any officer or employee of the United States any property belonging to the estate of a taxpayer or other person liable in respect of the tax, or (B) Withholding, falsifying, and destroying records Receives, withholds, destroys, mutilates, or falsifies any book, document, or record, or makes any false statement, relating to the estate or financial condition of the taxpayer or other person liable in respect of the tax; shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution.
Any person who willfully delivers or discloses to the Secretary any list, return, account, statement, or other document, known by him to be fraudulent or to be false as to any material matter, shall be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned not more than 1 year, or both. Any person required pursuant to subsection (b) of section 6047 or pursuant to subsection (d) of section 6104 to furnish any information to the Secretary or any other person who willfully furnishes to the Secretary or such other person any information known by him to be fraudulent or to be false as to any material matter shall be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned not more than 1 year, or both.
(a) Corrupt or forcible interference
Whoever corruptly or by force or threats of force (including any threatening letter or communication) endeavors to intimidate or impede any officer or employee of the United States acting in an official capacity under this title, or in any other way corruptly or by force or threats of force (including any threatening letter or communication) obstructs or impedes, or endeavors to obstruct or impede, the due administration of this title, shall, upon conviction thereof, be fined not more than $5,000, or imprisoned not more than 3 years, or both, except that if the offense is committed only by threats of force, the person convicted thereof shall be fined not more than $3,000, or imprisoned not more than 1 year, or both. The term “threats of force”, as used in this subsection, means threats of bodily harm to the officer or employee of the United States or to a member of his family.
(b) Forcible rescue of seized property
Any person who forcibly rescues or causes to be rescued any property after it shall have been seized under this title, or shall attempt or endeavor so to do, shall, excepting in cases otherwise provided for, for every such offense, be fined not more than $500, or not more than double the value of the property so rescued, whichever is the greater, or be imprisoned not more than 2 years.
If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.
If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor.