Taxpayers can be found guilty of filing false tax returns as a principal or as an accomplice under an aiding and abetting theory.
Jean Louis is a taxpayer found guilty of filing a false, fictitious and fraudulent income tax return (United States of America v. Jean Louis, U.S. Court of Appeals, 11th Circuit, Feb. 19, 2015).
The 11th U.S. Circuit Court of Appeals disagreed with Louis’s position that the federal government had failed to present evidence of his “intent” or “knowledge.” He claimed that his co-defendant was the “driving force” in the case and that he was an “unknowing dupe.”
In this case, Louis had incorporated a business. He then opened up a checking account for the business.
Subsequently, he filed a tax return using inflated and made-up numbers. He included income on his return of $9.8 million supposedly from his employer, Warner Brothers Distribution Company. Jean Louis did not work for Warner Brothers in any capacity.
He had someone named Duverger help him with the preparation of his income tax return – although the facts and circumstances reveal that he did most of the work himself.
The income tax return generated a refund of $600,000, which was sent to Louis’s business checking account. This refund was based on false and fictitious information.
Louis attempted to withdraw this money shortly after it was deposited to his account. He was stopped by the police.
To sustain a conviction for the offense of making a false claim to the federal government under Internal Revenue Code Section 287, the government must prove:
- The defendant knowingly presented a false claim against the United States to an agency of the United States;
- The claim was based on a false or fraudulent material fact; and
- The defendant acted intentionally and knew that the claim was false and fraudulent.
In Louis’s case, the false claim was the income tax return, which he presented to the IRS, a U.S. agency. The claim for refund was based on inflated, false and fraudulent income information, for example, the $9.8 million purportedly earned from Warner Brothers.
The court found that Louis was not an unknowing dupe. He actively participated in a scheme to defraud the IRS. He incorporated his business, opened up a business checking account, lied to Citibank concerning the checking account and lied to police about the source of the $600,000 deposit.
Louis lost his appeal because the appeals court ruled that the government had proved the three issues in Section 287 beyond a reasonable doubt.