United States v. Sing , 653 F. App'x 646 ( 2016 )

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
June 29, 2016
TENTH CIRCUIT
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
No. 15-4022
v. (D.C. No. 2:13-CR-00045-TC-2)
CAROL JEAN SING, (D. Utah)
Defendant - Appellant.
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
No. 15-4084
v.
(D.C. No. 2:13-CR-00045-TC-1)
GERRIT TIMMERMAN, III, (D. Utah)
Defendant - Appellant.
ORDER AND JUDGMENT *
Before KELLY, GORSUCH, and PHILLIPS, Circuit Judges.
Carol Sing and Gerrit Timmerman sold tax shelters. Using “corporations
sole,” they said, their clients could effectively shield their assets from IRS
collection efforts. That, of course, turned out to be anything but the case. The
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
corporation sole is among the oldest and least employed corporate forms, one that
allows the passage of property from one officeholder to his successor, a type of
incorporation that appears to have originated in England (and continues to be used
primarily today) as a means for religious societies to pass property from, say, one
bishop to the next. W. Cole Durham & Robert Smith, 1 Religious Organizations
and the Law § 3:52, Westlaw (database updated Dec. 2013). It does not operate
to protect the assets of ordinary taxpayers from outstanding debts owed to the
IRS. Indeed, about this much there is no longer any dispute in this case, for Ms.
Sing and Mr. Timmerman do not challenge their convictions to defraud the United
States under 18 U.S.C. § 371.
They do, however, contest their sentences. To determine their applicable
advisory guidelines ranges, the district court had to calculate the “tax loss” they
caused. The guidelines define tax loss as “the total amount of loss that was the
object of the offense (i.e., the loss that would have resulted had the offense been
successfully completed).” U.S. Sentencing Guidelines Manual (U.S.S.G.)
§ 2T1.1(c)(1) (U.S. Sentencing Comm’n 2014). Using a spreadsheet provided by
the government that summed up the debts owed to the IRS by several of the
defendants’ clients at the time they created their corporations sole, the district
court estimated the tax loss in this case was in excess of $2.5 million. Combining
that amount with various sentencing enhancements, the district court calculated an
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advisory guidelines range of 97 to 121 months in prison before selecting a
sentence of 36 months for Ms. Sing and 48 months for Mr. Timmerman.
Ms. Sing and Mr. Timmerman argue that the district court’s tax loss
estimate is fatally flawed and that this error infected the whole of the sentencing
process. It’s not entirely clear from the text of § 2T1.1(c)(1) what mens rea the
government must prove with respect to a tax loss. Rather than employing the
standard and rigorous mens rea categories discussed in the Model Penal Code or
much of contemporary criminal law, the guidelines say the government must show
the loss amount was the “object of the [defendants’] offense (i.e., the loss that
would have resulted had the offense been successfully completed).” And you
might well wonder whether, translated into the more helpful heuristics of the
Model Penal Code, this means the government must show the defendant intended,
knew of, or perhaps was recklessly indifferent to or negligent about the amount of
loss the government would have suffered “had the offense been successfully
completed.” But, as the defendants concede, they, the government, and the
district court in this case have all proceeded on the assumption that to qualify as
the “object of the offense” the loss in question must have been intended. See
United States v. Manatau, 647 F.3d 1048, 1048 (10th Cir. 2011). And that much,
they say, the government failed to prove in this case.
We disagree. A district court does not have to calculate a tax loss with
certainty; a reasonable estimate will do. See U.S.S.G. § 2T1.1 cmt. n.1; United
3
States v. Spencer, 178 F.3d 1365, 1368 (10th Cir. 1999). This court, too, will
reverse a district court’s factual findings in support of its tax loss calculation only
on a showing of clear error. See United States v. Hoskins, 654 F.3d 1086, 1092
(10th Cir. 2011). And it seems to us that, under these standards, the district
court’s judgment easily passes muster. The spreadsheet on which the court relied
at sentencing tallied up amounts several of the defendants’ clients owed the IRS
at the time they established their corporations sole. It is beyond reasonable
dispute, as well, that at least some of these amounts were known to Mr.
Timmerman because documents in his own files showed that his clients’ debts
added up to approximately $2.559 million. 1 The district court had ample
evidence, too, to infer that Ms. Sing knew about the information contained in Mr.
Timmerman’s files. Ms. Sing and Mr. Timmerman were business partners who
worked together over several years to sell corporations sole to scores of clients
and their business model was simple: Ms. Sing would set up corporations sole for
her own clients and serve as the resident agent for those created by Mr.
1
Documents in Mr. Timmerman’s files showed that Mr. Beal owed
$355,369.83. See Gov’t Supp. R. at 1, 93, 97, 100. Mr. Felt owed $140,299.23.
See id. at 11, 53. Mr. Hoffman owed $925,564.01. See id. at 23. Mr. Leavitt
owed $1,138,577.18. See id. at 37, 40, 43, 104, 109, 114, 119. These amounts
include penalties and interest. The government included penalties and interest in
its tax loss calculations and we do the same while reserving the question of its
propriety consistent with § 2T1.1, for any question that might be raised about it
was not sufficiently briefed here to permit meaningful review. See generally
United States v. Black, 815 F.3d 1048, 1055 (7th Cir. 2016).
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Timmerman, while Mr. Timmerman would refer clients to Ms. Sing. Finally,
there is plenty of evidence that the defendants knew their clients would attempt to
use their corporations sole to evade the debts they owed to the IRS — indeed,
several witnesses testified that they sought the defendants’ services with precisely
that intention in mind. Given this aggregation of facts, we believe a factfinder
could reasonably infer that the defendants intended, had their scheme succeeded,
to shield their clients from collection of the amounts they owed the IRS at the
time they engaged the defendants’ services. Neither does anyone before us
dispute that the court could lawfully make such a factual finding at sentencing
under United States v. Booker, 543 U.S. 220 (2005).
The judgment is affirmed. The government’s motion to supplement the
record on appeal is granted.
ENTERED FOR THE COURT
Neil M. Gorsuch
Circuit Judge
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No. 15-4022, United States v. Carol Jean Sing.
No. 15-4084, United States v. Gerrit Timmerman, III.
KELLY, Circuit Judge, concurring.
I agree with the court’s order and judgment but would reject on the merits
Ms. Sing’s argument, see Aplt. Br. (15-4022) at 24–25, 25 n.17; Aplee.
Consolidated Br. 22–29, that interest and penalties should be excluded from the
tax loss calculation. See United States v. Black, 815 F.3d 1048, 1055 (7th Cir.
2016).