This is a conspiracy case under 7206(2). To obtain a conviction for aiding and assisting in the filing of false tax returns under 26 U.S.C. § 7206(2), the government must prove the following elements beyond a reasonable doubt: "(1) the defendant aided, assisted, or otherwise caused the preparation and presentation of a return; (2) that the return was fraudulent or false as to a material matter; and (3) the act of the defendant was willful." United States v. Aramony, 88 F.3d 1369, 1382 (4th Cir. 1996) (quoting United States v. Salerno, 902 F.2d 1429, 1432 (9th Cir. 1990)). The third element, which is the only element in serious dispute in this case, requires that the Government demonstrate beyond a reasonable doubt that the defendant acted voluntarily and intentionally --and by not mistake, accident, negligence or other innocent reason --with the specific intent to aid and assist in the filing of a false tax return. See Sand, Siffert, Loughlin, & Reiss, Modern Federal Jury Instructions P. 59.01, No. 58-9; P. 59.04, No. 59-30 [hereinafter Jury Instructions]. "The Supreme Court has repeatedly held that in order to make out a 'willful violation' of section 7206(2) the government must prove defendants acted with specific intent to defraud the government in the enforcement of its tax laws." Salerno, 902 F.2d at 1432 (citing several Supreme Court cases).
United States of America v. Joseph Poole, Defendant.

U.S. District Court, Dist. Md.; RDB-08-0098, July 24, 2009.


A CPA was convicted of willfully aiding and assisting in the preparation of materially false income tax returns for the president and 100-percent owner of a mortgage brokerage firm and his wife. The government proved beyond a reasonable doubt that the CPA prepared the couple's returns and willfully failed to report as taxable income business funds used by the couple for their personal purposes. The CPA was aware that the owner received officer's compensation from the firm, that the firm's business funds were used to pay the couple's personal expenditures and that funds withdrawn by the owner for his personal expenses constituted shareholder distributions that were taxable to the couple.




MEMORANDUM OPINION


BENNETT, United States District Judge: In an Indictment that also contained tax fraud charges against Stilianos Mavroulis and Kyriakos Mavroulis ("Mavroulis Defendants"), 1 Defendant Joseph Poole was charged with conspiracy to defraud the Internal Revenue Service in violation of 18 U.S.C. § 371 (Count One) and aiding and assisting in the filing of false tax returns in violation of 26 U.S.C. § 7206(2) (Counts Six through Nine). Specifically, Counts Six through Nine allege in part as follows:


____________________________________________________________________________________
Count Date Prepared Tax Year Material False Matters on Tax Return

____________________________________________________________________________________
6 12/12/01 2000 Line 39: taxable income reported was $0,
when in fact the taxpayers had
substantial unreported taxable income




Lines 65-67a: tax payments and refund
claimed of $3,365, when in fact the
taxpayers owed a substantial amount of
income tax

____________________________________________________________________________________
7 4/11/03 2001 Line 39: taxable income reported was $0,
when in fact the taxpayers had
substantial additional unreported taxable
income




Lines 66-68a: tax payments and refund
claimed of $3,410, when in fact the
taxpayers owed a substantial amount of
income tax

____________________________________________________________________________________
8 11/18/03 2002 Line 41: taxable income reported as
$47,365, when in fact the taxpayers had
substantial additional unreported taxable
income




Line 73: Amount of income tax owed
reported as $3,292, when in fact the
taxpayers owed a substantial additional
amount of income tax

____________________________________________________________________________________
9 10/14/04 2003 Line 40: taxable income reported as
$475,535, when in fact the taxpayers had
substantial additional unreported taxable
income.




Line 60: Income tax reported as $141,644,
when in fact the taxpayers owed a
substantial additional amount of income
tax

____________________________________________________________________________________


On December 1, 2008, this Court granted Defendant Poole's Motion for Severance (Paper No. 35), based in large part on the Supplemental Memorandum in Support of Motion to Sever Defendants (Paper No. 59) filed by Stilianos Mavroulis. In that submission, Stilianos Mavroulis attached an affidavit by Defendant Poole in which Defendant Poole stated that he would only waive his Fifth Amendment privilege to testify at the severed trial of the Mavroulis Defendants (and not at a joint trial), and that his testimony would be that, inter alia: (1) he taught the Mavroulis Defendants the accounting program QuickBooks; (2) he frequently answered questions about the characterization of expenses; (3) he prepared the financial statements and tax returns; and (4) he doesn't believe that the Mavroulis Defendants acted to intentionally defraud the government. For the reasons stated on the record at the motions hearing conducted on November 26, 2008, this Court determined that the Defendants had met their burden under the test enunciated in United States v. Parodi, 703 F.2d 768 (4th Cir. 1983), 2 and consequently the Government's case against Defendant Poole was severed from the case against the Mavroulis Defendants.

On June 2, 2009, Defendant Poole waived his Seventh Amendment right to a jury (Paper No. 96), and the Government consented to proceeding with a bench trial (Paper No. 97). The bench trial of Defendant Poole commenced on Monday, July 13, 2009, and closing arguments were heard on Tuesday, July 21, 2009. The following day, the parties submitted, at the Court's request, proposed statements of law and findings of fact. By way of the accompanying Verdict, and for the reasons stated in this Memorandum Opinion, this Court finds Defendant Joseph Poole GUILTY as to the aiding and assisting in the filing of false tax returns charged in Counts Six through Nine, and NOT GUILTY as to the conspiracy to defraud the United States charged in Count One.


STATEMENTS OF LAW




I. Aiding and Assisting

To obtain a conviction for aiding and assisting in the filing of false tax returns under 26 U.S.C. § 7206(2), the government must prove the following elements beyond a reasonable doubt: "(1) the defendant aided, assisted, or otherwise caused the preparation and presentation of a return; (2) that the return was fraudulent or false as to a material matter; and (3) the act of the defendant was willful." United States v. Aramony, 88 F.3d 1369, 1382 (4th Cir. 1996) (quoting United States v. Salerno, 902 F.2d 1429, 1432 (9th Cir. 1990)). The third element, which is the only element in serious dispute in this case, requires that the Government demonstrate beyond a reasonable doubt that the defendant acted voluntarily and intentionally --and by not mistake, accident, negligence or other innocent reason --with the specific intent to aid and assist in the filing of a false tax return. See Sand, Siffert, Loughlin, & Reiss, Modern Federal Jury Instructions P. 59.01, No. 58-9; P. 59.04, No. 59-30 [hereinafter Jury Instructions]. "The Supreme Court has repeatedly held that in order to make out a 'willful violation' of section 7206(2) the government must prove defendants acted with specific intent to defraud the government in the enforcement of its tax laws." Salerno, 902 F.2d at 1432 (citing several Supreme Court cases).

A factfinder may determine that a defendant acted willfully under section 7206(2) if the defendant acted with willful blindness, i.e. that the defendant "purposely closed his eyes to avoid knowing what was taking place around him." United States v. Ruhe, 191 F.3d 376, 384-85 (4th Cir. 1999). Willful blindness may be found when "the defendant asserts a lack of guilty knowledge but the evidence supports an inference of deliberate ignorance." United States v. Abbas, 74 F.3d 506, 513 (4th Cir. 1996). "In a tax case, a willful blindness instruction is warranted if the record supports a finding that the defendant was aware of a high probability that his understanding of the tax laws was erroneous and consciously avoided obtaining actual knowledge of his obligations." United States v. Dantzler, 45 Fed. Appx. 259, 261 (4th Cir. 2002); see also United States v. Whittington, 26 F.3d 456, 463 (4th Cir. 1994) (holding that "the record need not contain direct evidence ... that the defendant deliberately avoided knowledge of wrongdoing; all that is necessary is evidence from which the jury could infer deliberate avoidance of knowledge").



II. Conspiracy

The elements of conspiracy to defraud the United States in violation of 18 U.S.C. § 371 are: (1) the existence of an agreement, (2) an overt act by a conspirator in furtherance of the agreement, and (3) an intent by the conspirators to agree to defraud the United States. United States v. Gosselin Worldwide Moving, N.V., 411 F.3d 502, 516 (4th Cir. 2005). As to the first element, it is not necessary that the alleged members of the conspiracy entered into any express or formal agreement. Instead, the Government must demonstrate that there was a mutual understanding, either spoken or unspoken, between two or more people to cooperate with each other to accomplish an unlawful act. See Jury Instructions, P. 19.01, No. 19-4. In the context of a section 371 conspiracy, the Fourth Circuit has held that "[t]he existence of a tacit or mutual understanding between conspirators is sufficient evidence of a conspiratorial agreement. Proof of the agreement may be established by circumstantial evidence." United States v. Cardwell, 433 F.3d 378, 390 (4th Cir. 2005) (internal quotation marks omitted) (citing United States v. Ellis, 121 F.3d 908, 922 (4th Cir. 1997) and United States v. Burgos, 94 F.3d 849, 862 (4th Cir. 1996) (en banc)). As to the third element, "[f]raudulent intent may be inferred from the totality of the circumstances and need not be proven by direct evidence." United States v. Ham, 998 F.2d 1247, 1254 (4th Cir. 1993).

This Court, as the finder of fact, need not convict Defendant Poole of a conspiracy to defraud the United States even if it finds Defendant Poole guilty of aiding and assisting in the filing of false tax returns. It is well settled that a conspiracy requires an agreement, which is not a required element in proving an aiding and assisting charge. See, e.g., United States v. Stozek, 783 F.2d 891, 894 (9th Cir. 1986) (affirming a conviction on aiding and assisting the misapplication of bank funds, despite an acquittal on the conspiracy charge to do the same, because "[c]onspiracy requires proof of an agreement, which aiding and abetting does not"); United States v. Arrington, 719 F.2d 701, 705 (4th Cir. 1983) ("There were several obviously differing elements of proof necessary for conviction under the conspiracy and aiding and abetting counts of the indictment. Conspiracy requires proof of 'preconcert and connivance not necessarily inherent in the mere joint activity common to aiding and abetting.'" (citations omitted)); United States v. Krogstad, 576 F.2d 22, 29 (3d Cir. 1978) ("The cases are clear that one may cause another to commit a crime, ... or aid and abet the commission of a crime, ... without being a conspirator with the principal offender. There need be no agreement, express or tacit[,] between the principal offender and the aider and abettor, and indeed the principal offender need not even be aware that he was aided and abetted by another.").


FINDINGS OF FACT




I. Facts Common To All Counts

Defendant Poole was licensed in Maryland as a CPA for a period of time prior to 1998, but was not licensed thereafter. Stilianos Mavroulis was the President and 100 percent owner of Fidelity Home Mortgage Corporation ("FHMC"), a Subchapter S corporation headquartered in Baltimore, Maryland. FHMC was a mortgage brokerage firm that, in 1999, shifted from being a "retail" mortgage brokerage firm to primarily a "wholesale" mortgage brokerage firm. As a result, FHMC's business grew substantially --at one point FHMC operated in forty-five states and had hundreds of millions of dollars on its accounting books. Kyriakos Mavroulis is Stilianos Mavroulis's son, and he worked at FHMC as the head of its accounting department during the tax years in question. All members of Stilianos Mavroulis's immediate family, including his wife Elizabeth Mavroulis and their five children, worked at FHMC at various times during tax years 1998-2003. Except for Vasilios Mavroulis, the Mavroulis children were not on FHMC's payroll and did not receive W-2's or 1099's during their employment at FHMC.

Between January 1, 1998, and October 18, 2004, Defendant Poole worked as an accountant for Bay Area Accounting & Management ("BAAM"), and in that role served as the outside accountant for FHMC. Defendant Poole prepared all of the year-end audited financial statements for FHMC for 1998 through 2003 (Gov. Ex.'s 98-103). Defendant Poole also prepared all of the informational returns for FHMC on Form 1120-S's that were filed with the IRS (Gov. Ex.'s 1-4), covering tax years 1998, 2000, 2001 (Defendant Poole prepared, but did not sign, the 2001 return), and 2003, as well as all of the joint personal returns for Stilianos and Elizabeth Mavroulis on Form 1040's for tax years 1998 through 2003 (Gov. Ex.'s 7-12). Poole billed between $30,000 and $40,000 annually to FHMC and, although FHMC and Stilianos Mavroulis represented less than 8% of BAAM's business, they comprised one of BAAM's largest clients. Defendant Poole testified that he worked no more than seventy-five hours a year for FHMC and Stilianos Mavroulis.

Defendant Poole recommended QuickBooks software to FHMC in 1998, and he and another employee installed the program in 1998. Defendant Poole trained Stilianos and Kyriakos Mavroulis on the program, and he thereafter relied on the accounting staff at FHMC to properly characterize and book the personal expenses of the Mavroulis family. The owner's draw account was referred to in QuickBooks as the shareholder draw account.

Stilianos Mavroulis also started two new companies during the relevant time period: Fidelity Promotions was incorporated on February 26, 2002; and 1012 Northpoint, Inc. was incorporated on July 17, 2002.



II. Aiding and Abetting

It cannot be disputed that Stilianos Mavroulis used FHMC funds to pay for personal expenses and other benefits in each tax year between 2000 and 2003, such as (but not necessarily limited to) compensating his children under the guise of shareholder draws ( see Gov. Exs. 87a-f & 88a-f), sending a starter check to Fidelity Promotions ( see, e.g., Gov. Ex. 86a), investing in the stock market through a personal E-Trade Securities account ( see, e.g., Gov. Exs. 84, 85), paying for a personal trip for the family to Greece ( see Gov. Ex. 82), and paying for school tuition for his children ( see, e.g., Gov. Ex. 92). 3 This Court credits Internal Revenue Agent Richard Wallace's ultimate conclusion that, based on his extensive review of the evidence in this case, substantial personal expenditures were being paid by business funds, and, based on the tax returns and financial statements (as discussed below), there was substantial unreported income, resulting in substantial unpaid taxes due to the IRS in the years in question. 4

At the time Defendant Poole prepared the 2000-03 Form 1120-S returns for FHMC and the 2000-03 Form 1040 tax returns for Stilianos and Elizabeth Mavroulis, Defendant Poole had access to FHMC's QuickBooks and knew that Stilianos Mavroulis was using FHMC funds to pay for these personal expenses and benefits. As Defendant Poole was well aware, many of these personal expenses and benefits were not booked in QuickBooks as shareholder draws ( see, e.g., Gov. Exs. 128b-d); instead, the expenses were buried in other categories that made detection difficult. Defendant Poole also knew that Stilianos Mavroulis was booking the paychecks that he provided to his children for their work at FHMC as shareholder draws, and that the Mavroulis children were being paid outside FHMC's payroll system.

In his role as the tax preparer for FHMC and Stilianos Mavroulis, Defendant Poole failed to properly account for the payment by FHMC of personal expenses and other benefits to Stilianos Mavroulis and his family members. As detailed in Government Exhibit 200, which was prepared by Internal Revenue Agent Richard Wallace, approximately $1.1 million of personal expenses were deducted against the gross receipts of FHMC in the Form 1120-S tax returns that were filed by FHMC in tax years 1998, 2000, 2001, and 2003, and/or prepared by Poole but were not filed (1999 and 2002). Stilianos Mavroulis withdrew approximately another $700,000 of FHMC funds for personal expenses that were not deducted against the gross receipts of FHMC, but which constituted shareholder distributions that were taxable to Stilianos Mavroulis because he lacked any basis in FHMC at the time those withdrawals were made. After accounting for amounts reported as income on tax returns filed by Stilianos Mavroulis's children (mostly for tax year 2003), the net total of FHMC funds used for Stilianos Mavroulis's personal purposes between 2000 and 2003 was approximately $340,977.25 in 2000, $271,092.38 in 2001, $475,456.63 in 2002, and $351,161.42 in 2003.

The stark differences between the financial statements (both the audited FHMC financial statements and the personal financial statements) and tax returns prepared by Defendant Poole strongly evidence criminal intent. Defendant Poole prepared corporate financial statements for FHMC that, inter alia, indicate that Stilianos Mavroulis received $120,000 in officer's compensation from FHMC in 2000, 2001, 2002, and 2003. Nonetheless, Defendant Poole willfully failed to include this amount as income on the Form 1040 returns for any of the years in question. ( Compare Gov. Exs. 9-12 with Gov. Ex. 100-103.) Another example is the fact that the personal financial statements for Stilianos and Elizabeth Mavroulis included large sums of money in foreign bank accounts ($261,499 in 2000 and $318,400 in 2001), yet the Form 1040 returns for these years indicated that such foreign bank accounts didn't exist. ( Compare Gov. Exs. 10-12 with Gov. Ex. 105-107.)

This Court does not credit Defendant Poole's testimony that he believed that Stilianos Mavroulis acquired at least $20 million of basis in FHMC because he personally guaranteed FHMC's warehouse lines of credit in that amount. 5 In fact, this is quite clearly not the case, as Defendant Poole knew (or, at a minimum, should have known if he were not willfully ignorant) that Stilianos Mavroulis lacked basis in FHMC to take any shareholder distributions from FHMC from 2000 to 2003 without declaring such distributions as capital gains on his 1040 tax returns. Moreover, although the financial statement prepared by Defendant Poole reflected shareholder distributions of $67,815 for 2000, $105,161 for 2001, and $155,781 for 2003, Defendant Poole willfully failed to include as a capital gain (and therefore taxable income) any of these shareholder distributions on Stilianos Mavroulis's Form 1040 returns for 2000, 2001, and 2003. 6 (Gov. Exs. 9, 10, & 12.)

The E-Trade Securities account ending in number 3304 was quite clearly a personal account of Stilianos Mavroulis, as Thomas Walsh, a manager at E-Trade Securities, testified that an E-Trade Securities account can be held in a corporate capacity if the necessary supporting documentation is provided. ( See Gov. Exs. 112, 125.) Stilianos Mavroulis chose to open his account in a personal capacity. Defendant Poole knew that Stilianos Mavroulis used corporate funds of FHMC to fund his personal E-Trade account and that those funds should have been treated as distributions to Stilianos Mavroulis and reportable as capital gains on his 1999, 2000, and 2001 Form 1040 returns. Nonetheless, Defendant Poole willfully failed to report as capital gains on Stilianos Mavroulis's Form 1040 returns the following amounts of distributions related to the E-Trade account: $61,000 in 1999; $173,605.76 in 2000; and $80,000 in 2001. (Gov. Exs. 8, 9, & 10.)

Based on the above facts, as well as the evidence and testimony at trial, this Court finds beyond a reasonable doubt that Poole willfully prepared the Form 1040 returns in question for tax years 2000-03 that failed to report as taxable income funds used for personal purposes. Thus, Defendant Poole is GUILTY of willfully aiding and assisting in preparing materially false Form 1040 returns for Stilianos Mavroulis and Elizabeth Mavroulis for 2000, 2001, 2002, and 2003, as charged in Counts Six through Nine of the Indictment. 7



III. Conspiracy

Unsurprisingly, the Government cannot point to any direct evidence of an actual agreement between Stilianos Mavroulis and Defendant Poole to establish a conspiracy to defraud the Internal Revenue Service. Instead, the Government argues its case circumstantially, pointing to (1) its contention that Stilianos Mavroulis and Defendant Poole are "sophisticated players," (2) the fact that Stilianos Mavroulis involved Defendant Poole in all of his accounting and tax work, and (3) a consistent pattern of shoddy professional work beginning in 1998, and continuing even after they knew that the IRS initiated a criminal investigation. 8 In addition, the Government also points to correspondence between Stilianos Mavroulis and Defendant Poole as support for the alleged conspiracy.

In a memorandum dated June 26, 2005, which appears to address taxes due to the IRS, Defendant Poole wrote to Stilianos Mavroulis that "[t]he credit card spread is not as lopsided in your favor as I would have liked, but we are still only dealing with a possible additional tax over three years of approx. $36,000..., and we have loss carryback to help defray that. My understanding is that you must potentially owe $60K before this rises to criminal level???" (Gov. Ex. 118.) In an email discussion on November 11-13, 2005, Defendant Poole wrote to Stilianos Mavroulis that "as you know we have cut many corners along the way, consequently audit trails, which are what he is requesting, simply are non-existent." (Gov. Ex. 120.) In response, Stilianos Mavroulis stated that:
[C]utting a corner is one thing, under-repporting [sic] is another. And trully [sic], I am not familiar with you cutting any corners on my [t]axes. I never requested something like that from you and neither [have] I requested that you underreport [sic] my taxes. With full knowledge I agree on the financials, there I knew of they were inflated [sic], [b]ut not on my [t]ax returns. On tax returns I relied on your creativity.

( Id.) On March 23, 2006, Defendant Poole wrote to Stilianos Mavroulis that he was "faxed ... some additional ... info last night - I need to review/audit that - then on to the creative part of this [ i.e.] making sure statements reach the needed goal!" (Gov. Ex. 129.) In an email to Stilianos Mavroulis dated July 11, 2007, Defendant Poole stated in relevant part: "[A]s far as anguish is concerned, I still wake up every morning wondering when the other shoe will drop on us because of your unfortunate hire of [the FHMC employee that triggered the criminal investigation] - I have protected you throughout on this and always will, so we are pretty even on the anguish front." (Gov. Ex. 111).

Although these emails demonstrate some level of coordination between Stilianos Mavroulis and Defendant Poole, they do not necessarily establish a conspiracy. The Indictment alleges that the conspiracy took place between 1998 and October 14, 2004, so all the emails are dated well after the alleged conspiracy took place. Moreover, Stilianos Mavroulis appears to explicitly disclaim an agreement when he wrote that "I am not familiar with you cutting any corners on my [t]axes. I never requested something like that from you and neither [have] I requested that you underreport [sic] my taxes."

The evidence in this case may cumulatively demonstrate beyond a preponderance of the evidence that there was a tacit, mutual understanding between Defendant Poole and Stilianos Mavroulis to knowingly and willfully prepare Form 1040 returns that substantially underreported the Mavroulis's taxable income. This Court does not find, however, that the evidence demonstrates beyond a reasonable doubt that such an agreement existed. Evidence supporting a meeting of the minds between Defendant Poole and Stilianos Mavroulis is simply not strong enough in this case for this Court to convict Defendant Poole of a conspiracy.


CONCLUSION


This Court finds Defendant Joseph Poole GUILTY as to the aiding and assisting in the filing of false tax returns charged in Counts Six through Nine, and NOT GUILTY as to the conspiracy to defraud the United States charged in Count One. A separate Verdict follows.

1 Kyriakos Mavroulis pled guilty to a Superseding Information (Paper No. 71) and was sentenced on May 22, 2009, and Stilianos Mavroulis pled guilty to the charges contained in the Indictment and is scheduled to be sentenced on September 30, 2009.

2 Addressing a motion for severance based on the asserted need for a co-defendant's testimony, the Fourth Circuit in Parodi determined that a trial court must first determine whether the defendant has demonstrated: (1) a bona fide need for the testimony of his co-defendant; (2) a likelihood that the co-defendant would testify at a second trial and waive his Fifth Amendment privilege; (3) the substance of his co-defendant's testimony; and (4) the exculpatory nature and effect of such testimony." United States v. Parodi, 703 F.2d 768, 779 (4th Cir. 1983). If such a showing is made, the trial court must then: (1) examine the significance of the testimony in relation to the defendant's theory of defense; (2) assess the extent of prejudice caused by the absence of the testimony; (3) pay close attention to judicial administration and economy; (4) give weight to the timeliness of the motion; and (5) consider the likelihood that the co-defendant's testimony could be impeached. Id.

3 Defendant Poole's theory of the case is that these expenses were not deducted as business expenses by FHMC, and, as a result, FHMC income was not improperly reduced on account of those payments. Thus, the net income of FHMC flowed through onto Stilianos Mavroulis's personal returns, and he owed no additional taxes on those funds. Defendant Poole's contention that there was no tax violation (let alone no criminal wrongdoing) is belied not only by Internal Revenue Agent Richard Wallace's convincing testimony, but also by the simple fact that Stilianos Mavroulis has pled guilty on the advice of his attorneys to four separate counts of filing false tax returns in violation of 26 U.S.C. § 7206(1).

4 Government Exhibit 117 is a purported tax return completed by Defendant Poole that was never filed and that indicates substantially more tax due to the IRS. The investigation into Defendant Poole's conduct was triggered when this exhibit was turned over to IRS officials by an employee of FHMC. Defendant Poole has raised several issues concerning this document. Specifically, Defendant Poole has argued that there is a missing tenth page to the document admitted into evidence (although there has been no evidence as to what was contained in the allegedly missing tenth page), and that the document admitted into evidence contains a fraudulent signature. Regardless, Defendant Poole does not contest that he actually completed a tax return that was never filed. ( See Paper No. 116 ( "[The FHMC employee] manipulated Mr. Poole into preparing a 'what if 2001 Form 1040 for Mr. and Mrs. Mavroulis, which [the FHMC employee] then used to convince the Government to initiate an investigation.").) This document demonstrates that if the Mavroulis's filed their joint Form 1040 tax return on a cash basis (and not an accrual basis), they would have owed substantially more taxes. Other than that limited purpose, this Court does not place any additional import on the document in making the findings of fact included herein.

5 This Court finds that Defendant Poole was sufficiently competent (even if he was not exceptional) at his asserted profession to complete the task at hand without committing the errors that he admits he made. His incompetency defense is therefore rejected. Moreover, this Court finds unavailing Defendant Poole's argument that he did not have the requisite intent because of the complexity of the tax returns. He has argued that he spent at most seventy-five hours a year for FHMC and Stilianos Mavroulis, while Internal Revenue Agent Richard Wallace spent 4,160 hours investigating this case. This argument overlooks the fact that it takes almost no time whatsoever to act in a willfully blind manner in the preparation of tax returns, yet it can take several thousand hours, as was the case here, for a single case agent to piece together a tax fraud stretching several years and involving the use of a large corporation's funds.

6 As to 2002, the corporate financial statement prepared by Defendant Poole did not list any amount of shareholder distributions. However, there was in fact $92,000 in transactions booked as shareholder draw in FHMC's Quick Books for that year. Defendant Poole, however, did not include this amount as a capital gain on Stilianos Mavroulis's 1040 return for 2002. (Gov. Ex. 11.)

7 Defendant Poole argues summarily in his proposed findings of fact that "[t]he Government has offered no proof that Mr. Poole willfully prepared tax returns that were fraudulent or false as to a material matter." The evidence quite clearly indicates beyond a reasonable doubt that the mistakes on the tax returns were material. See United States v. Aramony, 88 F.3d 1369, 1384-85 (4th Cir. 1996) (stating that a misstatement is material if it could hinder the IRS in verifying the accuracy of a tax return, and that "it is clear that a finding of materiality does not depend upon the amount of the unpaid tax" (citing cases)).

8 In its proposed findings of fact, the Government extensively delineates the errors made by Stilianos Mavroulis and Defendant Poole on the Form 1120-S's and Form 1040's for tax years 1998 and 1999. Although the Indictment alleges that the alleged conspiracy began in 1998, there are no independent substantive charges associated with the errors in 1998 and 1999. Therefore, this Court discerns no reason to outline in this Memorandum Opinion the extensive evidence as to these years, apart from acknowledging that (a) the evidence in this case does, in fact, indicate that significant tax mistakes were made in 1998 and 1999, and, (b) although the mistakes in tax years 1998 and 1999 are consistent with the mistakes made in tax years 2000 through 2003, these mistakes alone are insufficient to infer an agreement to conspire. An agreement to conspire cannot be inferred solely by reason of the tax violation itself because, otherwise, every criminal tax case involving a tax preparer and taxpayer would necessarily involve a conspiracy. There must be some independent evidence indicating a meeting of the minds.




Aiding and advising preparation of false returns. --Fraud and False Statements: Aiding and advising preparation of false returns

Conviction for willfully aiding and advising the preparation of false and fraudulent income tax returns was affirmed.

Herskovitz, CA-2, 54-1 USTC ¶9182, 209 F2d 881.

H.F. Cliff, CA-5, 60-1 USTC ¶9181, 271 F2d 126, aff'g DC, 60-1 USTC ¶9180. Cert. denied, 361 US 963.

F. Strangway, CA-9, 63-1 USTC ¶9183, 312 F2d 283. Cert. denied, 373 US 903.

J.L. Barnes, CA-6, 63-1 USTC ¶9247, 313 F2d 325.

J.M. Hedrick, CA-10, 66-1 USTC ¶9269, 357 F2d 121.

C.L.O. Edwards, CA-9, 67-1 USTC ¶9356, 375 F2d 862.

W.J. Driscoll, CA-1, 67-1 USTC ¶9430, 376 F2d 254.

A. Maius, CA-6, 67-2 USTC ¶9521, 378 F2d 716. Cert. denied, 389 US 905.

J.C. Ping, CA-8, 69-1 USTC ¶9248, 407 F2d 157.

S.A. Grayson, CA-5, 69-2 USTC ¶9639, 416 F2d 1073. Cert. denied, 396 US 1059.

S. Bernstein, CA-2, 70-1 USTC ¶9106, 417 F2d 641.

H. Davis, CA-5, 70-1 USTC ¶9375, 424 F2d 1241. Cert. denied, 400 US 821.

R.G. Warner, CA-8, 70-2 USTC ¶9470, 428 F2d 730.

J. Brown, CA-7, 70-2 USTC ¶9521, 428 F2d 1191. Cert. denied, 400 US 1191.

J.W. Baum, CA-7, 71-1 USTC ¶9130, 435 F2d 1197.

N.H. Egenberg, CA-2, 71-1 USTC ¶9303, 441 F2d 441. Cert. denied, 404 US 994.

L. Cramer, CA-2, 71-2 USTC ¶9565, 447 F2d 210.

A.J. Jackson, CA-7, 71-2 USTC ¶9739, 452 F2d 144.

M. McKee, CA-6, 72-1 USTC ¶9334, 456 F2d 1049. Cert. denied, 407 US 910.

J.H. Wheeler, CA-4, 73-1 USTC ¶9328. Cert. denied, May 29, 1973.

C.H. Jackson, CA-8, 73-1 USTC ¶9397, 477 F2d 879.

N.L. Le Fevre, CA-3, 73-2 USTC ¶9557, 483 F2d 477.

E.H. Fritz, CA-9, 73-2 USTC ¶9571, 481 F2d 644.

P.C. Washburn, CA-5, 74-1 USTC ¶9138, 488 F2d 139.

L.V. Amos, CA-8, 74-1 USTC ¶9447, 496 F2d 1269.

N. D'Andrea, CA-3, 74-1 USTC ¶9451, 495 F2d 1170.

A.R. Johnson, CA-5, 74-2 USTC ¶9504, 495 F2d 1097.

M. Abbas, CA-9, 74-2 USTC ¶9755, 504 F2d 123.

W.P. Dobbs, CA-5, 75-1 USTC ¶9210, 506 F2d 445.

J.D. Burks, CA-5, 75-1 USTC ¶9258, 508 F2d 672.

A.M. Villa, CA-10, 75-2 USTC ¶9523.

D.G. Crum, CA-9, 76-1 USTC ¶9214, 529 F2d 1380.

O.H. Miller, CA-9, 76-1 USTC ¶9228, 529 F2d 1125. Cert. denied, 426 US 924.

J.D. Clardy, CA-9, 80-2 USTC ¶9721, 612 F2d 1139.

A. Winograd, CA-7, 81-2 USTC ¶9622, 656 F2d 279. Cert. denied, 455 US 989, 101 SCt 1612.

T.C. Erickson, CA-10, 82-1 USTC ¶9175, 676 F2d 408.

J.M. Damon, CA-5, 82-1 USTC ¶9397, 676 F2d 1060.

R.S. Baskes, CA-7, 82-2 USTC ¶9526.

S.M. Moon, CA-2, 83-2 USTC ¶9581, 718 F2d 1210. Cert. denied, 104 SCt 2344.

V. Greger, CA-9, 83-2 USTC ¶9654. Cert. denied, 104 SCt 1002.

A. Isaksson, CA-7, 84-2 USTC ¶9966, 744 F2d 574.

A.B. Condo, CA-9, 85-1 USTC ¶9273.

J.L. Freeman, CA-9, 85-1 USTC ¶9421, 761 F2d 549.

J. Daly, CA-5, 85-1 USTC ¶9404, 756 F2d 1076.

L.D. Gleason, CA-8, 85-2 USTC ¶9519, 766 F2d 1239.

A.W. Kouba, CA-8, 87-2 USTC ¶9396, 822 F2d 768.

A.M. Pinto, CA-10, 88-1 USTC ¶9154, 838 F2d 426.

R.J. Sassak, CA-6, 89-2 USTC ¶9455, 881 F2d 276.

S.J. Gunary, CA-2, 88-2 USTC ¶9573, 860 F2d 521. Cert. denied, 109 SCt 1931.

C.A. Atkins, CA-2, 89-1 USTC ¶9195, 869 F2d 135.

E.K. Rowlee, CA-2, 90-1 USTC ¶50,189, 899 F2d 1275.

R.H. Pacheco, CA-9, 90-2 USTC ¶50,458, 912 F2d 297.

T.W. Tierney, CA-8, 91-2 USTC ¶50,509.

R.S. Cutler, CA-10, 92-1 USTC ¶50,062, 948 F2d 691.

J.L. Motley, CA-7, 92-1 USTC ¶50,104.

A.C. Kellogg, CA-9, 92-1 USTC ¶50,117, 955 F2d 1244.

D.K. Dunn, CA-7, 92-1 USTC ¶50,293, 961 F2d 648.

J.G. Crozier, CA-2, 93-1 USTC ¶50,219, 987 F2d 893.

R.M. Hirschfeld, CA-4, 93-1 USTC ¶50,098, 964 F2d 318.

D.L. Watson, CA-8, 93-2 USTC ¶50,608, 1 F3d 733.

S.G. Knapp, CA-7, 94-1 USTC ¶50,252, 25 F3d 451.

J. Klausner, CA-2, 96-1 USTC ¶50,173.

M.G. Marshall, CA-8, 96-2 USTC ¶50,678, 92 F3d 758.

G.C. Ervasti, CA-8, 2000-1 USTC ¶50,173, 201 F3d 1029.

O.L. Maye, CA-4, (unpublished opinion), 2000-1 USTC ¶50,261, 205 F3d 1335, aff'g, per curiam, an unreported district court decision.

T.C. Gaskill, CA-9 (unpublished opinion), 2000-2 USTC ¶50,702, aff'g, rev'g and rem'g on other issues an unreported district court decision.

S. Aragbaye, CA-9, 2001-1 USTC ¶50,126, 234 F3d 1101.

M. Wick, CA-9 (unpublished opinion), 2002-1 USTC ¶50,456, 34 FedAppx 273, aff'g an unreported District Court decision.

J.A. Gambone, Sr., CA-3, 2003-1 USTC ¶50,162, 314 F3d 163.

B.L. Jordan, CA-4 (unpublished opinion), 2003-1 USTC ¶50,514, 66 FedAppx 488, aff'g, per curiam, an unpublished District Court decision.

M. Brilliant, DC, 59-2 USTC ¶9601, 170 FSupp 759. Aff'd, CA-2, 60-1 USTC ¶9253, 274 F2d 618.

J. Gisehaltz, DC, 67-2 USTC ¶9616, 278 FSupp 434.

Individuals were properly convicted of aiding and abetting in the filing of fraudulent Forms W-4.

L. Clark, CA-5, 98-2 USTC ¶50,544, 139 F3d 485, aff'g, per curiam, an unreported District Court decision.

The defendant was found guilty of aiding and assisting in the preparation and presentation of false returns.

R.J. MacKenzie, CA-2, 86-1 USTC ¶9103, 777 F2d 811.

C.L.O. Edwards, DC, 64-2 USTC ¶9739, 230 FSupp 881.

M.J. Fronek, DC, 64-2 USTC ¶9746, 231 FSupp 8.

J. DeFabritus, DC N.Y., 85-2 USTC ¶9844, 605 FSupp 1538.

E.J. Bachler, 50 TCM 159, Dec. 42,162(M), TC Memo. 1985-291.

A defendant's conviction was affirmed where: 1.) instructing the jurors to reconsider their position if they found that a majority of the jurors took an opposite position and 2.) failing to address the jury's concern at having to work during a religious holiday did not constitute reversible error.

R.B. Graham, CA-3, 85-1 USTC ¶9317, 758 F2d 879.

Defendant's conviction for preparing false and fraudulent income tax returns for illiterate persons was affirmed.

C. Blount, CA-7, 64-2 USTC ¶9863, 339 F2d 331.

Defendant was found not guilty of preparing false returns.

M.M. Unger, DC, 58-2 USTC ¶9584, 159 FSupp 850.

An accountant who was the assistant secretary and a director of a corporation was guilty of assisting in preparing false and fraudulent returns for the corporation and some of its stockholders.

S.J. Brill, CA-3, 59-2 USTC ¶9694, 270 F2d 525.

A conviction for aiding in the preparation of false returns, based on the fact that the defendant had overstated the value of several yachts that had been donated to a university, was reversed and remanded. The trial judge gave inadequate instructions as to the probative value of the price at which the university subsequently sold the yachts. Moreover, the judge unduly restricted cross-examination of a government witness.

N. Wolfson, CA-5, 78-1 USTC ¶9456, 573 F2d 216.

The defendants' convictions for willfully advising the presentation or preparation of fraudulent returns were reversed due to the prosecution's failure to show that the defendants had the specific intent to defraud the government. At the time the defendants advocated a tax shelter program, there was no federal law, regulation or court decision warning that advocacy of the tax shelter would lead to criminal prosecution. Prosecution against the defendants for instructing an audience on how to create a tax shelter was barred by the first and fifth amendments in the absence of any showing that the defendants had a specific intent to incite violation of the law and that violation was imminent.

K.L. Dahlstrom, CA-9, 83-2 USTC ¶9557, 713 F2d 1423.

The organizer and leader of a group which expounded the belief that the federal income tax is unconstitutional as applied to wages and who, in exchange for dues paid, provided forms and instructions on the preparation of false W-4 forms was convicted of aiding and assisting in the preparation of false W-4 forms.

M.S. Kelley, CA-4, 85-2 USTC ¶9592, 769 F2d 215.

Conviction affirmed, defendant supplying a fraudulent report that greatly inflated the estimates of coal reserves in properties to induce people to invest in tax shelters and knowing that the report would be used to compute unjustified deductions.

W.G. Nealy, CA-4, 84-1 USTC ¶9293, 729 F2d 961.

A district court's finding that a taxpayer who was convicted of knowingly filing a materially false income tax return did not establish by clear and convincing evidence that IRS agents used fraud, trickery or deceit in gaining the interview with him was not clearly erroneous. There was no evidence that the IRS agents desired to interview the taxpayer as part of an independent criminal investigation. The interview was conducted with the taxpayer to investigate other tax years besides the one at issue. Because this was not yet a criminal investigation, the court did not have to decide whether the taxpayer had a Fifth Amendment right to rely on the IRS regulations.

W.A. Caldwell, Jr., CA-5, 87-2 USTC ¶9423, 820 F2d 1395.

The appellate court reduced a felony conviction for aiding and assisting in the filing of false W-3 wage transmittal forms to a misdemeanor conviction under Code Sec. 7204. However, it refused to reduce a felony conviction for furnishing an employee with a false W-2 form.

M.J. Hughes, CA-6, 91-1 USTC ¶50,022, 899 F2d 1495.

The conviction for conspiracy to file false income tax returns of an apartment manager who assisted in the creation and filing of fictitious tax returns for prospective tenants was upheld. Evidence that the defendant knew of the tax refund scheme and agreed to participate in it and the jury inference that he cooperated in the scheme by providing the names and biographical data of applicants at his apartment complex were sufficient to support conviction.

J.D. Orr, CA-10, 89-1 USTC ¶9220, 864 F2d 1505.

The IRS failed to prove beyond a reasonable doubt that embezzlers previously employed by a gambling casino acted with the willful and specific intent to aid or assist the casino in the preparation of false corporate income tax returns. The embezzlers acted for their own personal financial gain and received no benefit from the filing of any false corporate return.

L.J. Salerno, CA-9, 90-1 USTC ¶50,261, 902 F2d 1429.

Promoters who induced investors to purchase substantial amounts of life insurance by falsely representing that the buyer could completely avoid future payment of federal income taxes were liable to one such investor for violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). Mail fraud was established because the purpose of the scheme was to defraud, and it involved the mailing of false tax returns.

M.L. Hofstetter, CA-6, 91-1 USTC ¶50,102, 905 F2d 897.

Convictions for aiding and assisting in the preparation of false income tax returns were upheld in 16 of 29 counts against promoters of a tax shelter involving energy systems. Although the evidence was insufficient to support the IRS's global theory, which attempted to link together all instances of alleged false income tax preparation with the marketing of the tax shelter, sufficient evidence existed with respect to the 16 counts to show that the return filers never actually owned the equipment as claimed. Based on the incomplete state of the record regarding the other counts, the remaining convictions were reversed.

J.T. Coveney, CA-5, 93-2 USTC ¶50,513, 995 F2d 578.

A seminar organizer willfully aided and assisted seminar attendees in the preparation of false income tax returns. He had advised his attendees to classify themselves as nonresident aliens when they were, in fact, residents of the United States, subject to taxation and not entitled to the refunds they claimed. Therefore, he could not use a good faith defense to disguise his knowing disregard of well-established legal principles and duties.

E.G. Ambort, CA-10, 2005-2 USTC ¶50,453, 405 F3d 1109.

Tax shelter promoters willfully aided clients in filing false or fraudulent tax returns in violation of Code Sec. 7206(2). The promoters charged hundreds of clients to set up and manage trusts known as Unincorporated Business Organizations (UBOs), which purportedly avoided taxes on income streamed into them. The government sufficiently proved that the promoters aided, assisted, or otherwise caused the preparation and presentation of a false or fraudulent tax return. The promoters repeatedly advised clients that they did not have to file tax returns or pay tax once they transferred their income and assets to the UBO.

D.L. Smith, CA-9, 2005-2 USTC ¶50,565, 424 F3d 992.

An individual who prepared and filed tax returns containing false information was properly convicted for aiding and assisting in the preparation of fraudulent income tax returns in violation of Code Sec. 7206(2). The term "willful" was not too vague to allege that the individual intended to violate a known legal duty. "Willfulness" is a term of art with a known meaning for tax defendants of knowing one's duty and intentionally and voluntarily violating it. Furthermore, the indictment properly alleged the statutory element of willfulness; therefore, the court's decision to not release grand jury transcripts was not an abuse of discretion.

R.N. Whistler, CA-9 (unpublished opinion) 2005-2 USTC ¶50,569, 139 FedAppx 1, aff'g in part and rem'g in part an unreported DC Ariz. decision.

Investors were found not guilty of aiding and assisting in the filing of false and fraudulent tax returns because the government's contention that the underlying transactions were shams was not proved.

W.A. Kilpatrick, DC Colo., 90-1 USTC ¶50,319, 726 FSupp 789.

A financial broker's motion to dismiss an indictment charging him with aiding, counseling, and causing the preparation and presentation of a third party's false and fraudulent tax return for the purpose of assisting that party to obtain a loan was denied. Although the return overstated the third party's income, the false statement was "material" because it had the potential for hindering IRS efforts to monitor and verify his tax liability.

P. Bouzanis, DC Ill., 2003-1 USTC ¶50,315.

Taxpayers may not claim a refund of Social Security taxes paid based on the position that they have waived the right to receive Social Security benefits or claim a charitable contribution deduction for Social Security taxes "donated" or "gifted" to the government. Persons, including return preparers, who promote these frivolous positions and those who assist taxpayers in claiming tax benefits based on these frivolous positions are subject to penalties including criminal prosecution for assisting or advising about the preparation of a false return, statement, or other document.

Rev. Rul. 2005-17, 2005-1 CB 823.

Claims that the 16th Amendment to the Constitution, which authorizes Congress to lay and collect taxes on income, was not properly ratified, that the federal income tax is a violation of the Due Process Clause of the Fifth Amendment, and that the payment of taxes is a form of slavery under the 13th Amendment are frivolous. Return preparers and promoters of these frivolous positions may face penalties including criminal prosecution for assisting or advising about the preparation of a false return, statement, or other document.

Rev. Rul. 2005-19, 2005-1 CB 819.

Taxpayers may not refuse to file returns, or reduce or eliminate their tax liability based on their opposition to government programs or policies due to moral, ethical or religious beliefs. Return preparers and promoters of these frivolous positions may face penalties including criminal prosecution for assisting or advising about the preparation of a false return, statement, or other document.

Rev. Rul. 2005-20, 2005-1 CB 821.

The use of different forms of a taxpayer's name does not create a "straw man" that allows the taxpayer to avoid his or her tax liability. Return preparers and promoters of these frivolous positions may face penalties including criminal prosecution for assisting or advising about the preparation of a false return, statement, or other document.

Rev. Rul. 2005-21, 2005-1 CB 822.

The IRS has cautioned taxpayers to avoid falling victim to a variety of tax scams. Newly issued guidance sets out many of the most common frivolous arguments used by tax-avoidance schemes and details potential civil and criminal penalties that may be imposed. Persons, including return preparers, who promote frivolous positions and those who assist taxpayers in claiming tax benefits based on such positions may face penalties and be enjoined from return preparation. Notice 2005-30, 2005-1 CB 827, modified and superseded.

Notice 2006-31, I.R.B. 2006-15, 751.

The IRS has issued a fact sheet that urges taxpayers to be careful when choosing a tax preparer. The fact sheet reminds taxpayers that, even if they are unaware of false information that may appear on their returns, they are responsible for any additional taxes and interest and may be subject to penalties and criminal prosecution for filing a false tax return. The fact sheet includes helpful hints when choosing a return preparer, criminal investigation statistical information on return preparer fraud, case summaries of criminal and civil legal actions against certain return preparers, and directions for reporting suspected tax fraud activity.

IRS Fact Sheet 2007-12, January 29, 2007.

An individual was properly convicted and sentenced for willfully aiding and assisting in the preparation of a materially false tax return and making a false statement to an FBI agent. The fact that he was directly involved in hiring employees whose income was not reported to the IRS and that he repeatedly failed to provide his accountant with necessary documentation provided ample evidence of willfulness.

I.S. Abuhawwas, CA-4 (unpublished opinion), 2007-1 USTC ¶50,337, 215 FedAppx 311, aff'g, per curiam, an unreported DC Va. decision.

A loan broker's conviction for assisting an individual in the preparation and presentation of a false tax return was vacated. Although a false tax return was used to defraud a lender and the United States Small Business Administration, that form was not filed with the IRS. It could not be established beyond a reasonable doubt that the return actually filed with the IRS was false. Therefore, although the broker aided in the commission of loan fraud, he did not violate Code Sec. 7206(2).

P. Palivos, CA-7, 2007-1 USTC ¶50,447, 486 F3d 250.

An individual's conviction and sentence for aiding and abetting the filing of fraudulent tax returns was upheld. The evidence at trial established that the individual prepared fraudulent tax returns for his clients and also instructed and supervised the preparation of fraudulent returns by his employees.

C. Contreras, CA-2 (unpublished opinion), 2007-2 USTC ¶50,712, 247 FedAppx 293, aff'g an unreported DC N.Y. decision.

The IRS urges taxpayers to be careful when choosing a tax preparer. According to the fact sheet, return preparer fraud generally involves the preparation and filing of income tax returns that claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions. Preparers may also fraudulently obtain tax credits, such as the earned income tax credit, by manipulating income figures. The fact sheet reminds taxpayers that, even if they are unaware of false information that may appear on their returns, they are responsible for any additional taxes and interest and may be subject to penalties. The fact sheet includes helpful hints when choosing a return preparer, criminal investigation statistical information on return preparer fraud, case summaries of criminal and civil legal actions against certain return preparers, and directions for reporting suspected tax fraud activity.

IRS Fact Sheet FS-2008-10, January 2, 2008.

A tax preparer was properly convicted and sentenced for willfully preparing false or fraudulent income tax returns. The evidence at trial clearly established that the individual willfully prepared returns containing materially false statements. Further, the court's instruction to the jury was not in error and did not affect the jury's verdict.

G.D. Goosby, CA-6, 2008-1 USTC ¶50,331.

Two individuals were properly convicted of conspiracy and assisting in the preparation and presentation of false income tax returns. The district court had jurisdiction over federal criminal proceedings involving tax crimes, the public protection provision of the Paperwork Reduction Act (PRA) was not a defense to their criminal violations of the Internal Revenue Code, and congressional failure to enact Title 26 into positive law did not impugn the validity or enforceability of the laws set forth in that title.

E. Ferrand, CA-5 (unpublished opinion), 2008-2 USTC ¶50,423, aff'g, per curiam, an unreported DC La. decision.

An individual who personally prepared amended income tax returns containing false information for her clients was properly convicted of willfully aiding and assisting in the preparation of false and fraudulent income tax returns. Substantial evidence was presented from which a reasonable-minded jury could have found the defendant guilty beyond a reasonable doubt. The government's evidence established that the individual prepared the amended returns reporting inflated deductions, contributions and credits, thereby wrongly entitling her clients to become eligible for additional refunds. The individual's argument that the erroneous amounts were the result of a computer glitch was rejected. The individual had education, training and experience in the preparation of amended tax returns, knew that the deductions were false and willfully provided the inaccurate numbers.

A. Tinder, DC Iowa, 2008-2 USTC ¶50,684.

The IRS has issued a fact sheet that urges taxpayers to be careful when choosing a tax preparer. The fact sheet reminds taxpayers that even if they are unaware of false information that may appear on their returns, they are responsible for any additional taxes and interest and may be subject to penalties and criminal prosecution for filing a false tax return. The guidance also includes hints on choosing a return preparer, criminal investigation statistical information on return preparer fraud, case summaries of criminal and civil legal actions against certain return preparers, and directions for reporting suspected tax fraud activity.

IRS Fact Sheet FS-2009-7, January 6, 2009.

The sentence imposed on an individual convicted of aiding and assisting in the preparation of false tax returns was vacated and remanded because the government did not provide a reasonable estimate of the aggregate tax loss attributable to the preparer's crime. The government's use of a non-random sample to calculate the average tax loss per return resulted in an average tax loss that was not representative of all the returns filed by the individual.

I. Ahanmisi, CA-4, 2009-1 USTC ¶50,365.