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The Eighth Circuit Reverses a Sentence, And Shows Why Relying On Criminal Conduct At Sentencing Without A Conviction Is Troublesome

It’s a surprise to many people that when you go to sentencing in federal court, you aren’t sentenced just for the conduct you were convicted of. Rather, there’s no limit on what a federal judge can consider when it imposes sentence on someone.

For some kinds of sentencing considerations, that makes sense. If the person being sentenced spends every Saturday volunteering to help aged nuns, it’s the kind of thing we all think the court should be able to take into consideration when imposing sentence.

Some categories of information are more troubling though. None is more troubling than a sentence based on other criminal conduct that was either not proven to a jury, or, worse, where a jury has already rejected the evidence.

Yet, in federal court, if a judge wants to consider evidence that didn’t persuade a jury of guilt, the judge can do that. I think it’s troubling for how we view jury service, and it’s troubling as a matter of being fair to people charged with a crime. Nonetheless, it happens.

One problem with relying on other criminal conduct that wasn’t submitted to a jury is that the vetting of the facts is less stringent. United States v. McLain shows why.

McLain ran a staffing agency. He employed a staff of nurses. He classified them as independent contractors instead of employees, and didn’t pay or account for employment taxes. Willfully failing to pay or account for one’s tax obligations violates 26 U.S.C. S 7202. Mr. McLain was sentenced to 48 months in prison.

The Eighth Circuit rejected his arguments that the district court misconstrued section 7202. To be sure, it is an unusually aggressive move to bring a tax prosecution for wrongly classifying people as independent contractors when they are employees. Much of the government’s proof here, it appears, turned on a question of state regulation of nurses.

At sentencing, the court included in its calculation of tax loss, which, in turn, drove the guidelines calculation, two tax deduction “gifts” to two other people. Basically, Mr. McLain told two people to take deductions that they were not entitled to. If they had taken his advice, it would have increased the amount of tax that would have been uncollected — his sentence was increased based on this counterfactual tax loss.

The government argued that this advice violated 26 U.S.C. S 7206(2), which criminalizes helping someone else prepare file a false tax return. So, even though Mr. McLain wasn’t charged with helping the two other people to prepare a false tax return, the court looked at the advice he gave them, and decided that was good enough.

The Eighth Circuit disagreed. The appeals court noticed that helping someone prepare a false tax return requires that the people actually prepare a false tax return. Because the sentencing court didn’t look into whether false returns were ever filed, or make any kind of factual determination about a return ever being filed, McLain’s sentence should not have been increased for helping someone file a false tax return.

Surely, had that gone to a jury, the government would have focused on that question more clearly. The court would have looked to make sure all the elements were met and prepared a cleaner record on whether McLain met all the elements of the crime he was sentenced for having committed.

Yet, by avoiding a jury, this scrutiny was avoided.

If you have questions about how federal criminal charges are different than state criminal charges, please visit this page on Maryland federal criminal charges or Washington DC federal criminal charges.