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2nd Circ. Affirms UK Lawyer's Conviction of Aiding Clients in US Tax Evasion

2nd Circ. Affirms UK Lawyer's Conviction of Aiding Clients in US Tax Evasion

On  November 26, 2018 we posted Decade Of Dodging US Taxes Gets UK Lawyer 20 Months in Prison where we discussed that English lawyer Michael Little was set to 20 months in prison on November 20, 2018 for helping the children of a deceased investor dodge taxes on their $14 million inheritance over a decade and for failing to pay his own taxes, ruling also that the former Royal Marine lied as he testified in his own defense.

U.S. District Judge P. Kevin Castel ordered Little, 68, to report to federal prison on Feb. 19. The sentence came in well below a request by prosecutors for a prison term in the range of 10 to 12 years as contemplated by official guidelines.

Evasion Unpunished Breeds More Evasion,” The Judge Said, Saying Little’s Tax-Dodging Was Born f Greed And Arrogance But Adding He Was Unlikely To Offend Again

Upon Leaving Custody.

Judge Castel held off on the government’s request to order Little to pay roughly $4.4 million of restitution. Little contests the amount, and the matter will be briefed in coming weeks.

Now according to Law360, the Second Circuit ruled on September 30, 2020 upholding a lower court, the sufficient evidence existed to convict a U.K. attorney on charges he helped the children of a dead investor avoid taxes on their $14 million inheritance, 

The attorney, Michael Little, failed to support his argument on appeal that the lower court's jury instructions didn't match the charges in his indictment, a panel of judges ruled.
Little was sentenced to 20 months of incarceration and a one-year term of supervised release. He was also ordered to pay $4.4 million in restitution to the U.S. government.
Little appealed on various grounds. He argued that the jury instructions were so different from his original indictment that they violated his Fifth Amendment rights by amending the indictment.

The indictment had described Little's crime as assisting in the preparation of fraudulent Forms 1040 or Forms 706, the estate tax return. The court instructed the jury to determine whether Little had prepared fraudulent Forms 3520, which reports receipt of foreign gifts.

The Second Circuit disagreed. To prevail on a constructive amendment claim, defendants must show that the terms of an indictment are altered by the presentation of evidence and jury instructions, the court said. They must modify "essential elements" of the offense to the point that a defendant is indicted on one offense and convicted of another, the court said. The statute criminalizing aid in filing a false 1040 also criminalizes filing a false 3520, it said.
Little also argued his indictment charged him with failing to file a foreign bank account report for at least one bank in the Channel Islands, but the jury instructions referred to a second foreign account in the U.K. The court rejected that argument as well, finding the "essential element" of the offense was the same.
As for his failure to file FBARs, Little said evidence that he willfully failed to file the reports was insufficient. He had merely misunderstood a complex tax code, the attorney argued.
The court, however, said Little was an experienced attorney with a quarter-century of experience conducting international financial transactions. A reasonable juror could conclude his failure to comply with the law was willful, the decision said.
While agreeing with the lower court on most the merits of the case, the appeals court struck down part of the lower court's order of restitution. The trial court lacked the authority to order restitution immediately upon judgment, the Second Circuit said, citing U.S. v. Adams . 
The U.S. and U.K. governments also agreed that the U.S. had the authority to tax Little's income only for the years 2005 through 2008. The court vacated the finding that Little owed $134,000 and ordered the lower court to recalculate the amount.

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Read more at: Tax Times blog

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