Petition for Writ of Certiorari — Punke v. United States (No. 98-1214)

’ Supreme Court, u.s.

FILED

BS1Z1 4 Ave 24 s098

Supreme ( OFFIGE OF THE CLERK

OCTOBER TERM, 1998

UNITED STATES OF AMERICA,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

J. Hamilton McMenamy*

*Counsel of Record

LAW OFFICES OF J. HAMILTON MCMENAMY

8500 N. Stemmons Expressway

Suite 6010 LB#65

Dallas, Texas 75247

(214) 689-3883 F.

LAWYERS PRINTING COMPANY 7th & Franklin Bidg. Richmond. Virgrrua 23219 (804) 648-3664

i

QUESTIONS PRESENTED

1.

Whether the Petitioner has substantive and procedural

due process rights in 26 USC §§ 6201 et seq. for the

assessment and collection of federal income taxes?

2.

Whether the proscription against rendering declaratory

relief involving a matter of federal taxes provided in 28 USC §

2201(a) applies to restrict admissibility of evidence involving

declaratory relief in a criminal tax case which is a case of first

impression as to alleged additional underreported income?

3.

Whether 18 USC § 3231 operates to nullify the

proscription in 28 USC § 2201(a) in a criminal tax case

involving a matter of first impression as to alleged

underreported income?

4.

Whether 18 USC §§ 3663 & 3664 can be substituted

lawfully for the assessment and collection procedures mandated

in 26 USC § 6201, ef seq., regarding federal income taxes?

i

PARTIES TO THE PROCEEDING BELOW

The parties before this Court are those set forth in the

caption

iil

TABLE OF CONTENTS

Questions Presented ...... es. GS lwincaus ud

Parties to the Proceeding Below .......... sss, il

I Sg ea i ie had eden - ill

CY SD), tae. wpe ee soe iv

Petition for Writ of Certiorari Vere ene s l

Opinions Below ............ a 5 -

Statement of Jurisdiction ............... verre l

Constitutional and Statutory Provisions Involved .... 2

Statement of the Case ................... ad 3

Reasons for Granting the writ ........... anaes 4

I. Unless taxpayers have judicial recourse to

ensure strict compliance by the Internal Revenue

Service and the government in the assessment

and collection of the federal income tax,

taxpayers will continue to suffer from illegal and

erroneous tax assessments and collections

being made contrarytolaw. ........ 4

IT. In assuming jurisdiction under 18 USC §

3231 for prosecution of a criminal tax case, the

district court must consider the proscription

iv

Contents

Page

provided in 28 USC § 2201(a) against giving

declaratory relief in a matter of federal taxes. 5

II] Denying a taxpayer access to the United

States Tax Court prior to criminal charges

being brought against him for a charge which

necessarily includes the determination of

alleged additional income, or income tax

liability, is a violation of his substantive and

procedural due process rights set forth in 26

USC § 6201, ef seq., and guaranteed by the

Fifth Amendment to the Constitution of the

United States | 6

Conclusion 8

y

TABLE OF CITATIONS

Cases Cited: Page

Laing v. United States, 423 U.S. 161 (1976) ....... 6

Constitutional Provisions:

ons ok oie op Pleo wale ne RE OA 6

Statutes Cited:

jowew wore ...... 8. a va Ca RR 2,3

D2 oo S vee Pheu els a Oaale Beale! , aed

16 USC § 3663 ....... ee ery tte 2,3,5,7

18 USC § 3664 .... | es Take Gee

26 USC § 6201 ....... 2,,4,5,6,7

26 USC § 6213(a) .. | | ares 2,6

a ee | ee ae 2,3

ee ee TERE AROSE |

ae Wee 6 OMe is owe. a Pur sae

Miscellaneous:

Rule 10(a) of the Supreme Court of the United States 4

|

PETITION FOR WRIT OF CERTIORARI

Clarence G. Punke respectfully petitions for certiorari to

review the judgment and opinion of the United States Court of

Appeals for the Seventh Circuit in United States of America v.

Joseph C. Minneman and Clarence G. Punke.

OPINIONS BELOW

Amended judgment in the district court was filed against

Punke on October 9, 1997, on one [1] count of conspiracy, and

three [3] counts of filing false tax returns. On April 17, 1998,

the Court of Appeals for the Seventh Circuit affirmed his

conviction. On May 26, 1998, the Court of Appeals for the

Seventh Circuit denied Punke’s Petition for Rehearing en Banc.

The opinion in United States of America v. Joseph C.

Minneman and Clarence G. Punke is reported at 143 F.3d 274,

and is reprinted in the Appendix hereto at 1-23. The order of

the Seventh Circuit denying Punke’s Petition for Rehearing en

Banc is reprinted in the Appendix hereto at 24. The judgment

from the district court is reprinted in the Appendix hereto at 29.

STATEMENT OF JURISDICTION

The jurisdiction of this Court is invoked under 28 USC

§1254(1). This matter involves an important federal question

which is in conflict with other Supreme Court decisions.

The criminal judgment was entered on June 23, 1997,

and, to correct a clerical mistake, was amended on October 9,

1997; and the Amended Judgment is reprinted in the Appendix

hereto at 29. The date of entry of the Order denying Punke’s

Petition for Rehearing En Banc was May 26, 1998, and is

reprinted in the Appendix hereto at 24.

2

Punke timely filed his Petition for Writ of Certiorari

with this Court on August 24, 1998: which Petition was

returned as being out of form. The time designated by the Clerk

of the Supreme Court for resubmitting his Petition is sixty [60]

days from September 1, 1998; which date falls on October 31,

1998. Therefore, this Petition is timely filed, and the letter of

the Clerk dated September 1, 1998 is reprinted in the Appendix

hereto at 26.

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

18 USC § 371 provides for punishment for members of

a conspiracy against the laws of the United States.

18 USC § 3231 provides for general jurisdiction in the

district courts of all offenses against the laws of the United

States.

18 USC §§ 3663 & 3664 provide for restitution to be

paid to crime victims.

26 USC § 6201, et seqg., provide the only method

whereby the government is empowered to assess and collect the

income tax against taxpayers.

26 USC § 6213(a) provides, in part, that “... no levy or

proceeding in court for its [alleged additional tax liability]

collection shall be made, begun, or prosecuted until such notice

[notice of deficiency] has been mailed to the taxpayer, ...”

26 USC § 7206(1) provides for punishment for filing

faise tax returns.

3

28 USC § 2201(a) provides, in relevant part, that the

district courts of the United States are authorized to give

declaratory relief “except with respect to federal taxes”.

STATEMENT OF THE CASE

The district court below assumed jurisdiction in this

matter pursuant to 18 USC § 3231. Punke was charged with

one [1] count of conspiracy against the laws of the United

States, in violation of 18 USC § 371; and three [3] counts of

filing false income tax returns, in violation of 26 USC §

7206(1). This case was tried by a jury. This case arose out of a

charge of conspiracy brought by the United States against

Punke and Minneman. The United States alleged that Punke

had conspired with Minneman to violate the tax laws. The

government alleged that Punke and Minneman devised an

elaborate scheme in order to accomplish hiding income, and

that they had conspired to underreport the actual amount of

income received by Punke to the Internal Revenue Service.

The district court permitted the government to introduce

at trial evidence pertaining to alleged amounts of underreported

income received by Punke. Because of this evidence having

been admitted, the jury found Punke guilty of filing false

income tax returns and of conspiring with Minneman to defraud

the United States. At sentencing, the district court awarded

$154,800 to the government as a victim under 18 USC §§ 3663

& 3664. This amount coincides with the exact amount of

additional income tax liability alleged by the government to be

owed by Punke for the years in question.

The Court of Appeals fer the Seventh Circuit did not

address this issue fully, and permitted the declaratory relief

given in the criminal tax case to stand; in violation of 28 USC §

SOUR Linear par ae ne ghee Re

SO ol en aS Rial RE Se ca ls Tg hl aE a ase UP OR.

enki D700m 7

4

2201(a), and Punke’s right to substantive and procedural due

process in the assessment and collection of federal income tax

as provided in 26 USC §§ 6201, ef seg., and as guaranteed by

the Fifth Amendment to the Constitution of the United States.

REASONS FOR GRANTING THE WRIT

The vitality of the process provided in 26 USC § 6201,

et seq., for assessing and collecting the federal income tax, has

been compromised by the failure of the court below to ensure

strict adherence with those processes, and with the prohibition

against the rendering of declaratory relief in this matter

involving federal taxes, as provided in 28 USC § 2201 (a).

Punke invokes the supervisory power of this Court

under Rule 10(a) of the Rules of the Supreme Court of the

United States, to correct a departure from the accepted and

usual course of judicial proceedings by the United States

District Court, and sanctioned by the Court of Appeals for the

Seventh Circuit.

This matter involves an important federal question

which is in conflict with other Supreme Court decisions.

I

UNLESS TAXPAYERS HAVE JUDICIAL

RECOURSE TO ENSURE STRICT COMPLIANCE BY

THE INTERNAL REVENUE SERVICE AND THE

GOVERNMENT IN THE ASSESSMENT AND

COLLECTION OF THE FEDERAL INCOME TAX,

TAXPAYERS WILL CONTINUE TO SUFFER FROM

ILLEGAL AND ERRONEOUS TAX ASSESSMENTS AND

COLLECTIONS BEING MADE CONTRARY TO LAW.

5

The government has devised a method, other than that

prescribed by Congress, for the assessment and collection of the

federal income tax. This method consists of bringing against a

party, a criminal charge for violation of the federal income tax

laws, and then, upon a finding of guilty, having the alleged

additional income tax liability assessed against the party via the

restitution statutes as provided in 18 USC §§ 3663 & 3664,

after the district court has deciared that the government is a

victim for purposes of restitution. All of this is accomplished

without the party having been afforded an opportunity to contest

the alleged additional income, or resulting income tax liability,

in the United States Tax Court as mandated by 26 USC § 6201],

el seq.

I]

IN ASSUMING JURISDICTION UNDER 18 USC §

3231 FOR PROSECUTION OF A CRIMINAL TAX CASE,

THE DISTRICT COURT MUST CONSIDER THE

PROSCRIPTION PROVIDED IN 28 USC § 2201(a)

AGAINST GIVING DECLARATORY RELIEF IN A

MATTER OF FEDERAL TAXES.

in 28 USC § 2201(a), Congress proscribed the federal

district courts to render a declaratory judgment concerning a

matter of federal taxes. The proscription concerning declaratory

relief in a tax matter, with only one specific exception, is

absolute. Congress did not provide an exception in 2201(a) for

the district courts to hear a_ criminal tax case prior to the

determination of any alleged additional income, or income tax

liability, in the United States Tax Court, as provided in 26 USC

§ 6201, ef seq.

a

6

ill

DENYING A TAXPAYER ACCESS TO THE

UNITED STATES TAX COURT PRIOR TO CRIMINAL

CHARGES BEING BROUGHT AGAINST HIM FOR A

CHARGE WHICH NECESSARILY INCLUDES THE

DETERMINATION OF ALLEGED ADDITIONAL

INCOME, OR INCOME TAX LIABILITY, IS A

VIOLATION OF HIS SUBSTANTIVE AND

PROCEDURAL DUE PROCESS RIGHTS SET FORTH IN

26 USC § 6201, ET SEQ., AND GUARANTEED BY THE

FIFTH AMENDMENT TO THE CONSTITUTION OF

THE UNITED STATES.

In Laing v. United States, 423 U.S. 161 (1976), the

Supreme Court held that it was improper for the Internal

Revenue Service not to issue a notice of deficiency to a

taxpayer, thereby denying a taxpayer access to the Tax Court

423 US. at 176

No other procedures can be substituted for the due

process safeguards provided by Congress for the assessment

and collection of any legitimate tax liability which may be

determined by the only court of competent jurisdiction [the

United States Tax Court] to be due and owing by Punke, after

proper notice and opportunity to be heard. Congress has

mandated that, absent a notice of deficiency, no proceedings in

any court for the collection of any tax alleged to be owed, can

be maintained lawfully. 26 USC § 6213(a); which section is

reprinted at the Appendix hereto at 44. Determination of any

alleged deficiency must be made in accordance with that

process, as set forth in 26 USC § 6201, ef seg., and any

}

deviation therefrom is a gross violation of the substantive and

procedural due process rights of the Defendant.

In the case herein, the district court not only permitted

evidence to come into the case concerning an alleged additional

amount of underreported income, but also declared the Internal

Revenue Service to be a victim entitled to restitution, and

assessed the alleged additional tax liability against Punke under

the restitution statutes, as provided in 18 USC §§ 3663 & 3664.

In addition, in spite of the holding in Laing v. United

States, upholding the mandate from Congress as provided in the

procedures set forth in 26 USC § 6201, e/ seqg., regarding the

assessment and collection of federal income taxes, the court

below did not consider this matter important enough to warrant

serious review.

8

CONCLUSION

The petition for writ of certiorari should be granted

Respectfully submitted,

J. Hamilton McMenamy

Counsel of Record

J. Hamilton McMenamy, P.C

8500 Stemmons Expressway

Suite 6010 LB #65

Dallas, Texas 75247

(214) 689-3883

(214) 689-8822 facsimile

Attorney for Petitioner

TABLE OF CONTENTS

Page

Appendix A --- Opinion Of The United States Court Of

Appeals For The Seventh Circuit Decided April

Fh SY a eeee teehee eee l

Appendix B -- Order Of The United States Court Of

Appeals For The Seventh Circuit Denying

Petition for Rehearing En Banc ._............ 24

Appendix C --- Letter Of The Clerk Of The Supreme

Court Of The United States Extending Time To

File Proper Petition For Writ Of Certiorari .. 26

Appendix D --- Judgment Of The District Court. 29

Appendix E --- 26 USC § 6213(a) Restrictions

Applicable To Deficiencies; Petition To Tax

«| Kebuueekeudacateuaeoreu xcs Sa

]

APPENDIX A --- OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE SEVENTH CIRCUIT

DECIDED APRIL 17, 1998

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Decided April 17, 1998

Nos. 97-2614 & 97-2676

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

V.

JOSEPH C. MINNEMAN and CLARENCE G. PUNKE,

Defendants-Appellants.

Reported at:

143 F.3d 274; 1998 U.S. App. LEXIS 7633; 98-1 U.S. Tax Cas.

(CCH) PSO, 347; 81 A.F.T.R.2d (RIA) 1544

SUBSEQUENT HISTORY: [**1] Rehearing Denied May

26, 1998, Reported at: 1998 U.S. App. LEXIS 10789.

PRIOR HISTORY: Appeal from the United States District

Court for the Central District of Illinois. No. 96 CR 10010.

Michael M. Mihm, Chief Judge.

DISPOSITION: AFFIRMED.

CORE TERMS: guideline, restitution, trust account, tax loss,

amount of loss, sentence, clarifying, amount of restitution,

restitution order, sophisticated, enhancement, conspiracy,

prosecutor, special skill, sentencing, deposit, presentence report,

convict, hide, closing argument, amount of tax, gross income,

tax return, involvement, summons, theory of defense,

responded, altered, checking account, tax preparer

COUNSEL: For UNITED STATES OF AMERICA, Plaintiff -

Appellee: Bradley W. Murphy, OFFICE OF THE UNITED

STATES ATTORNEY, Peoria, IL USA.

For JOSEPH C. MINNEMAN, Defendant - Appellant: David

B. Mote, OFFICE OF THE FEDERAL PUBLIC DEFENDER,

Springfield, IL USA. Richard H. Parsons, OFFICE OF THE

PUBLIC DEFENDER, Peoria, IL.

For CLARENCE G. PUNKE, Defendant - Appellant: J.

Hamilton McMenamy, Dallas, TX.

JUDGES: Before CUMMINGS, BAUER, and EVANS, Circuit

Judges.

OPINION BY: EVANS

OPINION: [*277] EVANS, Circuit Judge. This is a case

about a businessman, Clarence Punke, who conspired with his

attorney, Joseph Minneman, to hide over $700,000 from the

IRS. Punke’s business is the inspection, testing, servicing, and

repair of pressurized vehicles and tanks. An unusual business,

perhaps, but apparently a lucrative one—especially if you pay

no taxes. During the three years from 1989 through 1991,

3

Punke’s gross receipts totaled nearly $790,000. He reported

income of less than $100,000 to the IRS. Punke proudly

bragged to a business associate (in a conversation overheard by

the associate’s wife, Sue Shank) about his success in defrauding

the government. Punke explained that his attorney and friend,

Minneman, put the money and assets under other names to hide

them from the tax collector. Punke boasted that Minneman

helped him cheat the IRS and that Minneman’s knowledge of

the tax laws helped Punke shuffle money around to avoid

detection. Punke told another business [**2] associate that he

reported only minimum wage income to the IRS, which was not

smart enough to figure out the deception.

The relationship between Punke and Minneman dates back at

least to 1981 when Minneman handled a bankruptcy for Punke.

During the 1980’s Punke did business as Punke Bros., Inc., a

company that never filed tax returns and Officially dissolved in

1983. In 1984 Minneman incorporated a pressurized tank

business named Midwest Certified Welding and Testing

(“MCWT”). Minneman filed the tax returns for this business for

several years. From 1989 through 1991 Punke forwarded most

of his income directly to Minneman, who deposited the funds in

a long-term trust account (# 117250). Minneman regularly

withdrew cash from the account and gave the money to Punke.

He also purchased two trucks, a trailer, and real estate for Punke

with $31,000 from the account. Minneman kept the interest on

Punke’s funds and transferred $42,000 of Punke’s money into

his Own account (he wrote “client loan” on the check), later

using some of the money to purchase a Cadillac. The numbers

tell the story: During 1989, 1990, and 1991 Punke earned

$346,273, $298,760, [*278] and $141,474, respectively.

Punke [**3] sent Minneman $328,000, $261,000, and

$100,000 for deposit in account # 117250. Apparently Punke

4

either retained the difference or had his wife (Brenda) deposit

the money in her checking account. Punke reported Schedule C

business income for the years in question of $16,850, $16,425,

and $17,900. On business tax returns for MCWT Minneman

reported income of $9,490, $10,040, and $26,475. After the

sham collapsed in 1991 MCWT reported gross receipts of over

$473,000 on its 1992 tax return.

In 199] Punke’s amended personal tax return caught the

IRS’s attention. Punke filed the amended form to claim

substantial casualty losses. The IRS noted Punke’s modest

business income and suspected something fishy. A civil audit

was started, and as part of the investigation the IRS sent agents

to question Minneman in June of 1991. The IRS requested

information about Minneman’s trust accounts and the source of

funds for those accounts. Predictably, Minneman refused to

cooperate, explaining that he could not reveal information about

his clients. Minneman did furnish the IRS with a year-end

summary sheet showing his law practice income. At a second

meeting Minneman proved only slightly more [**4]

forthcoming. He gave the IRS the checking account records

from his law firm operating account. The IRS inquired about the

source of some funds transferred into the operating account and

Minneman explained that the money came from a trust account

When the IRS asked to inspect the trust account records,

Minneman refused—again claiming privilege. The attorney

explained that the IRS would have to rely on his word regarding

the source of the funds. The IRS responded that it would issue a

summons for the bank records. Minneman countered that the

IRS could not summons an attorney’s trust account records. A

few weeks later Minneman partially capitulated, however. He

allowed the IRS agent to inspect the monthly bank statements

for two trust accounts, although he refused to provide

is

5

documents to clarify the source of the funds. By November of

1991 Minneman provided access to checks and deposit slips for

the trust account. Again, the IRS could not determine the source

of the funds, but the investigator noted that Minneman wrote a

number of checks to cash. Minneman explained that he gave

this money to the client. Once again Minneman refused to

divulge the source of the funds. Finally, the case [**5] was

referred to the Criminal Investigation Division of the IRS. In the

meantime Punke began to invoice his customers as MCWT

instead of as Punke Bros. Additionally, Punke opened a

checking account for MCWT and began to claim he was the

president of the company.

On August 27, 1992, the IRS criminal investigators

questioned Minneman. At first Minneman refused to identify

the source of the money. He stated that the money in the trust

account was not his own income, although he did receive the

interest on the account. Later in the discussion, however,

Minneman admitted that the funds in the trust account came

from Punke as revenue from MCWT. He explained that Punke

owned the company and that Minneman dispersed money as

requested.

The investigators questioned Punke immediate after. their

“interview” with Minneman. Punke explained that Dale Meier,

a tax preparer from Lincoln, Illinois, filed Punke’s personal

returns. Punke admitted that he sent business income to

Minneman (or deposited it in the new MCWT account). He said

he reported as Schedule C income only the money he retained,

not the income he sent to Minneman, but he later explained that

he also reported the money he received from [**6] the

account in lieu of a salary. Punke could not explain how he

6

could afford to live on the income reported on his personal

returns

In his brief in this case Punke explains that the trouble all

began with his bankruptcy. He faced “trouble opening bank

accounts” and “when he set up bank accounts, the funds in

those accounts would be garnished.” Because Punke spent so

much time on the road, “his inability to deposit money into an

account was even more crippling than it would have been if he

were not on the road.” His friend Minneman helped him solve

this problem by coming up with the trust account plan. Punke

and Minneman [*279] continue their mitigation efforts by

explaining that Minneman had no knowledge of Brenda

Punke’s account. They note that Minneman never sent any

information to Punke’s tax preparer. In addition, they point out

that Punke neglected to take several allowable business

deductions from his gross income during the crucial three years.

A grand jury indicted Punke and Minneman in March of

1996, charging them with conspiracy to impede the IRS. See /8

U.S.C. § 37]. Punke was also charged with filing false tax

returns for 1989, 1990, and 1991. See 26 U.S.C. § 7206(1).

A [{**7] jury convicted Punke and Minneman on all charges

after a trial that wrapped up in 1997. Minneman received a 30-

month sentence along with 3 years of supervised release. The

court ordered him to pay restitution of $25,000 to the IRS.

Punke received a 21-month sentence along with 3 years of

supervised release. The court ordered him to pay $154,800 in

restitution to the IRS. Judge Mihm ordered that liability for the

restitution payments be joint and several. In calculating the

amount of tax owed for purposes of restitution, the judge

allowed Punke roughly half of the deductions he claimed.

>

Because restitution was ordered, no fines were imposed. We

now consider the defendants’ joint appeal.

First, Punke and Minneman attack one of the court’s rulings

issued before trial. During pretrial maneuvering Judge Mihm

granted the government’s motion in limine prohibiting the

defendants from introducing evidence of legitimate business

deductions that Punke could have taken on his Schedule C from

1989 to 1991 unless Punke could first establish that he knew he

could have taken the deductions before he filed his returns. The

defendants claim that this ruling prevented them from

presenting evidence [**8] that would refute the required

mental state of willfulness, a necessary element of the offense

of conspiracy to commit tax fraud. They further argue that

requiring Punke to prove his knowledge as a precondition to

presenting evidence undermined his right not to testify and his

right to present a defense based on the actual taxes owed. As

part of this argument the defendants claim that because the

deductions would offset some of Punke’s gross income, the jury

might conclude that the defendants did not have a financial

motive to defraud the government and, thus, did not knowingly

falsify Punke’s income on the returns. The defendants explain

that evidence of the deductions would have allowed the jury to

find that they acted negligently, not willfully.

The chief problem with this argument is that the amount of

taxes Owed is irrelevant to a prosecution for tax fraud. See, e. g.,

United States v. Marashi, 913 F.2d 724, 736 (9" Cir. 1990).

Here, Judge Mihm generously ruled that Punke could introduce

evidence of the deductions if he presented some evidence of his

knowledge of their availability. While the judge certainly placed

a burden on the defendants, it amounted to no more than a

requirement [**9] of a preliminary showing to establish

8

admissibility rather than an erosion of the right not to testify.

Furthermore, as the government correctly notes in its brief, the

defense never proffered evidence of the deductions and,

therefore, they seek a review of the issue in a vacuum.

Next, the defendants allege several problems with the

government’s closing argument, including factual

misstatements and improper arguments. The government

responds that it merely drew permissible inferences from the

evidence and rebutted comments made by the defendants in

their closing remarks to the jury.

First, the defendants allege error with a series of rhetorical

questions posed to the jury by one of the prosecutors. The

prosecutor asked why Minneman sent Punke to Meier (the tax

preparer) rather than preparing Punke’s taxes himself. The

prosecutor then answered the question, arguing that Minneman

attempted to distance himself from the fraud by letting someone

without knowledge of the funds in the trust account prepare

Punke’s tax return. This argument, we think, was fair game

because it was invited when the defense argued that had Punke

and Minneman conspired, Minneman would never have let

anyone else [**10] prepare the questioned tax return.

{*280] Second, the defendants claim error in the closing

argument because one of the prosecutors explained that even

though Illinois required Minneman to turn over the interest from

his IOLTA (Interest on Lawyer’s Trust Account) account to the

state, Minneman kept the interest earned on Punke’s trust

account. Minneman made no contemporaneous objection to the

comment, but now he argues that it violated a pretrial ruling that

the government could not comment on irregularities in

Minneman’s IOLTA account. While the comment mentioned

9

Minneman’s IOLTA ac-count, it only suggested that keeping

the interest on Punke’s account flouted Illinois IOLTA

requirements. The comment did not remotely imply that

Minneman mismanaged his actual IOLTA account.

Third, the defendants claim that the government

impermissibly overstated the extent of the crime, see United

States v. Donato, 32] U.S. App. D.C. 287, 99 F.3d 426, 432

(D.C. Cir. 1996), by telling the jury that they had 708,000

reasons to convict Punke and Minneman. The defense did not

object, but beyond that the comment merely responded to

Minneman’s attorney’s creative closing ploy: “Parson’s Top

Ten Reasons to Acquit [**11] Minneman.” Here, the

magnitude of the underreporting helps establish the willfulness

of the violation, for as the government notes, a $708 mistake

might be an honest oversight, but a $708,000 “mistake” is more

likely to be a deliberate dodge. We see nothing wrong with the

prosecutor’s colorful retort.

Fourth, the defendants claim that the prosecutor

impermissibly referred to other jury decisions by stating that “it

has become extremely fashionable these days to ask juries to

leave their common sense down here in the jury box.” The

defense claims that the remark “called to mind recent high

profile cases, such as the first Rodney King, Menendez brothers

and the O.J. Simpson trials, in which unpopular verdicts were

returned.” According to the defense, this comment amounted to

an invitation to convict Punke and Minneman for reasons

beyond the evidence. See United States v. Severson, 3 F.3d

1005, 1015 (7" Cir. 1993). Once again, the defense did not

object at trial. The government explains that it merely

responded to a defense argument that the jury should weigh the

evidence with reference to their observations and experiences in

10

life, as the judge instructed, rather than their common [**12]

sense. Even if the prosecution did mean to conjure up memories

of outrageous acquittals, the one comment seems to us to be far

too elliptical to constitute plain error.

With their allegations regarding error in the closing argument

exhausted, the defendants turn their attention to the jury

instructions. Minneman complains that the court failed to

instruct on his theory of defense. Minneman’s contentions stem

from the prosecution’s emphasis on his refusal to cooperate

with the IRS during its investigation. The government

characterized Minneman’s conduct as “stonewalling” and

painted him as engaged in a cover-up of guilty deeds. (The

government counters that the comments on Minneman’s

conduct in closing served only to rebut the two closing

argument references by the defense to Minneman as “a man

with nothing to hide.”) Because of the government’s argument,

the defense requested jury instructions on the nature of and

rationale for the attorney-client privilege and the ethical duty of

confidentiality. The defense contended that Minneman’s sense

of professional duty, rather than his involvement in crime,

explained his reluctance to provide information. The defense

argues that the court’s [**13] refusal to give their requested

instructions deprived them of the opportunity to present a theory

of defense supported by the law and evidence. See United States

v. Neville, 82 F.3d 750, 761 (7" Cir.), cert. denied, /36 L. Ed

2d 177, 117 S. Ct. 249 (1996); United States v. Wiman, 77 F.3d

981, 985 (7 Cir. 1996). Since the court’s instructions did

describe the attorney's duty of confidentiality (although at the

end of instructions that focused mainly on the ability of the IRS

to summons bank records and the obligation of an attorney not

to disclose such information in the absence of a summons) we

do not believe that the instructions viewed as a whole failed to

1]

treat the issue of the attorney-client relationship. See United

States v. McNeese, 90] F.2d 585, 607 (7 Cir. 1990).

Furthermore, the instructions [*281] allowed the defense to

argue its theory to the jury. See United States v. Douglas, 818

F.2d 1317, 1322 (7" Cir. 1987) (“It is essential for purposes of

the Fifth Amendment’s requirement of a fair trial that the jury

be able to evaluate .. . the adequacy of [the defendants’] theory

of defense.”).

Next, the defense contends that the government lacked

sufficient evidence to convict [**14] Punke and Minneman.

The defense focuses primarily on whether the government

produced auequate evidence to convict Minneman—if the

governir unt lacks evidence against Minneman, its claims of a

conspiracy collapse. The defense relies on United States vy.

Kraig, 99 F.3d 1361, 1368 (6” Cir. 1996), for the proposition

that the prosecution needs strong evidence of an attorney’s

knowledge of an illegal scheme to create an inference that the

attorney willingly participated in that crime. In Kraig, however,

the Sixth Circuit rejected a special standard for attorneys.

Nevertheless, according to the defense, the government lacked

evidence of Minneman’s involvement in the preparation of

Punke’s tax returns. On the contrary, the prosecution presented

strong evidence of: Minneman’s involvement in Punke’s

business; Minneman’s multiple deposits of Punke’s income in

the trust account; Minneman’s distribution of funds.

Minneman’s transfer of funds to purchase a Cadillac:

Minneman’s collection of interest on the trust account:

Minneman’s false tax returns for MCWT: and Minneman’s

purchase of business equipment for Punke. And because the

court instructed the jury to consider Sue Shank’s testimony only

[**15] with regard to Punke (and not Minneman), we do not

consider Shank’s testimony regarding Punke’s boasts about

12

Minneman and their ability to pull the wool over the eyes of the

IRS in weighing the evidence against Minneman. But, even

absent Shank’s testimony about Punke’s_ remarks, the

government presented enough evidence for a rational jury to

infer Minneman’s involvement in a tax avoidance conspiracy.

See United States v. Pearson, 113 F.3d 758, 761 (7" Cir.), cert.

denied, 1/39 L. Ed. 2d 619, 118 S. Ct. 641 (1997).

The defendants also raise several challenges to their

sentences. First, they argue that Judge Mihm erred in requiring

them to choose between the 1991 guidelines, in effect at the

time of the offenses, and the 1996 guidelines, in effect at the

time of the sentencing proceeding. The defendants chose to

apply the 1991 guidelines. We think the district court was

correct in its application of the 1991] guidelines, whether by the

choice of the defendants or otherwise.

The 1991 guidelines, corresponding to the date of the offense,

carried a base offense level of 14. The 1996 guidelines carried a

base offense level of 16. This 2-level increase arose on

November 1, 1993, as part of [**i6] an amendment which

consolidated and revised many of the guidelines applicable to

tax offenses. See U.S.S.G. App. C, Amendment 491, pp. 385-

395.

The general rule, of course, is that the court uses the

guidelines in effect on the date that a defendant is sentenced.

U.S.S.G. § 1B1.11(a). But an old guideline should be used if the

new one raises ex post facto concerns. See United States v.

Aman, 31 F.3d 550, 557 (7" Cir. 1994).

Because the amended guidelines (1996) provided a 2-level

increase in the offense level over the 1991 guidelines, the

13

district court could abandon the 1996 guidelines as violative of

the Ex Post Facto Clause and apply the 199] guidelines to the

benefit of the defendants. On top of that, the defendants chose

the 1991 guidelines when asked by the district judge, and that

choice is a waiver of any complaint that the 199] guidelines

should not have applied.

The defendants actually sought the application of a portion of

the 1996 guidelines along with the lower base offense level

from the 1991 guidelines. They sought to reduce the tax loss

(and thus the base offense level) by the application of language

in the 1996 guideline that was added in 1993 by Amendment

491. [**17] At sentencing, the guideline read, in pertinent

part:

(A) If the offense involved filing a tax return in which gross

income was underreported, the tax loss shall be treated as equal

to 28% of the unreported gross income [*282] (34% if the

taxpayer is a corporation) plus 100% of any false credits

claimed against tax, unless a more accurate determination of the

tax loss can be made.

U.S.S.G. § 2T1.10(1)(A). Amendment 491 had taken a

portion of the language of § 2T1.3 (now deleted) and added

“unless a more accurate determination of the tax loss can be

made.” U.S.S.G. App. C, Amendment 491. p. 386. The

defendants sought a piecemeal application of the most favorable

portions of the 199] guidelines and a favorable portion of the

1996 guidelines. The defense argued that Amendment 491 was

a Clarifying amendment and, as such, could be applied to their

sentencing. Judge Mihm correctly rejected this offer to apply

the guidelines in a piecemeal fashion, for the guidelines cover

this situation:

The Guidelines Manual in effect on a particular date shall be

applied in its entirety. The court shall not apply, for example,

one guideline section from one edition of the Guidelines

Manual and another guideline [**18] section from a different

edition of the Guidelines Manual. However, if a court applies an

earlier edition of the Guidelines Manual, the court shall

consider subsequent amendments, to the extent that such

amendments are clarifying rather than substantive changes.

U.S.S.G. § 1B1.11(b)(2).

Judge Mihm correctly found that the new language of §

2T1.10(1)(A) was not a clarifying amendment. The new

definition of tax loss in Amendment 491 was a significant

departure from the 1991 definition found in the now defunct §

2T1.3(a). Some of the language (i.e., percentages) was carried

over. Some of the language (referring to taxable income) was

deleted altogether. The phrase “unless a more accurate

determination of the tax loss can be made” is new to the

definition. The sentencing commission stated that one of the

purposes of Amendment 491 was to adopt a “uniform definition

of tax loss” where none had previously existed. U.S.S.G. App.

C, Amendment 491, p. 395.

The defendants claim that the Court of Appeals for the Sixth

Circuit, in an unpublished opinion, held that Amendment 491

clarifies the definition of tax loss. True to an extent, but the

court did not hold that all of Amendment 491 was [**19]

clarifying, nor did it deal with the new definition of “tax loss”

found at § 2T1.1©@(1)(A).

We have, on a number of occasions, decided whether

guideline amendments are “clarifying” or “substantive.” In

" Regen ea ee

15

United States v. Lykes, 999 F.2d 1144 (7" Cir. 1993), an

application note to § 4B1.2 (career offender) was held to be a

substantive amendment because it changed existing case law as

it had been interpreted by every appellate court to consider the

language of the guideline. /d. at //50; see U.S.S.G. § 4B1.2,

comment. (n.2). The application note changed the definition of

“crime of violence” to exclude the offense of unlawful

possession of a firearm by a felon. One factor pointing toward

finding a substantive amendment is whether an important

substantive definition is altered.

In Ebbole v. United States, 8 F.3d 530 (7” Cir. 1993), cert.

denied, 5/0 U.S. 1182, 127 L. Ed. 2d 573, 114 S. Ct. 1229

(1984), the defendant sought the benefit of a third point for

acceptance of responsibility, added by an amendment to the

guidelines. We noted that the amendment altered the language

of the guideline itself by adding the third point to § 3E1.1.

Because the amendment changed the language as [**20] to

what constituted acceptance of responsibility and had the effect

of reducing offense levels, we held it to be a substantive

amendment. Id.

In finding that Amendment 500 clarified § 3B1.1 (role in the

offense), we explained that the application note (U.S.S.G. §

3B1.1, comment. (n.2)) neither changed the language of the

guideline nor imposed an unreasonable interpretation of its

plain language. United States v. Fones, 51 F.3d 663, 669 (7"

Cir. 1995). So in deciding between calling an amendment

substantive or clarifying, we have looked closely at the

language of the change.

In one case from the Fifth Circuit, § 2T1.1©(3) (added by

Amendment 491) was referred to as a clarifying amendment

16

without discussion. United States v. Clements, 73 F.3d 1330,

1339 n.14 (1996). We take no issue with that conclusion, as far

as it goes, because certain provisions of Amendment [*283}

49] are “clarifying” in nature. The new definition of “tax loss,”

however, is a substantive change. It uses some language from

the discarded § 2T1.3, deletes some wording, and adds new

language. It altered a key definition (tax loss) by changing the

actual wording of the guideline itself, and the effect is a

lowering [**21] of offense levels when proper proof is

produced. Under the new definition, which allows the court to

inquire into the actual tax burden, the authority of the court is

expanded to accept proof showing a lesser amount of taxes

owed. As in Lykes and Ebbole, when a key phrase is defined or

redefined by changing the guideline itself, and the effect is to

change offense levels, the amendment is substantive. Section

2T1.1©(1)(A) substantively redefined the term “tax loss,” and

Judge Mihm was correct when he declined to consider the new

definition pursuant to U.S.S.G. § 1B1.11(b)(2).

The defendants’ second attack focuses on Judge Mihm’s

decision to enhance the defendants’ sentences for use of

sophisticated means. The defense claims that the tax fraud

scheme was simple, not complex—Minneman did nothing

sophisticated by merely depositing money in the trust account.

Thus, the court should not have enhanced the sentences under

U.S.S.G. § 2T1.1(b)(2) (1991), the “sophisticated means”

enhancement for “conduct that is more complex or

demonstrates greater intricacy or planning than a routine tax-

evasion case.” Id. in commentary. The defense loses this point

right out of the gate. Compared to [**22] simply not reporting

income, the use of multiple corporate names (one officially

defunct) and the placement of funds in a trust account both

constitute complex efforts to hide income. See, e.g., United

17

States v. Becker, 965 F.2d 383, 390 (7” Cir. 1992) (efforts to

make income untraceable, such as deposits into an account

without a defendant’s name or social security number,

constitute sophisticated means).

Next, Minneman launches a two-pronged challenge to the

propriety of the court’s enhancement of his sentence for the use

of special skill. See U.S.S.G. § 3B1.3. Minneman claims that he

did not use his legal education to significantly facilitate the

offense and he argues that application of the special skill and

the sophisticated means enhancements -onstituted

impermissible double counting of identical conduct. See United

States v. Haines, 32 F.3d 290, 293 (7" Cir. 1994).

The government counters the first argument by reminding us

that Minneman thwarted the IRS by claiming attorney-client

privilege, using his knowledge of tax law to file returns for

MCWT, and using his knowledge of trust law to set up the

client trust account. Generally, the government notes, a special

skill need [**23] not relate directly to the offense of

conviction. See United States v. Graham, 60 F.3d 463, 469 (8""

Cir. 1995) (enhancing sentence of lawyer who used knowledge

of trust instruments to conceal assets, and make false

statements, during his own bankruptcy). Regarding the double

counting claim, it’s true that the factual basis for the two

adjustments may overlap somewhat. But so long as the court

finds a sufficient independent factual! basis for both adjustments,

it may impose both. Haines, 32 F.3d at 293. Here, the facts

underpinning the special skill enhancement differ sufficiently

from the facts supporting the sophisticated means enhancement

The special skill adjustment focuses on Minneman’s use of his

legal training. The sophisticated means enhancer arises because

18

of the use of multiple accounts and corporate names. Thus, both

enhancements could be invoked.

Finally, Punke challenges Judge Mihm’s restitution order.

Punke argues that the government lacked the authority to seek

the order without first providing a notice of tax deficiency as

required under the tax laws. See Laing v. United States, 423

U.S. 161, 46 L. Ed. 2d 416, 96 S. Ct. 473 (1976); 26 U.S.C. §

62/]3(a). Punke also [**24] claims that the government

obtained an impermissible declaratory ruling on a tax matter by

bringing a criminal suit. See 28 U.S.C. § 220/(a). Punke seems

to take this argument even further by alleging that the court

itself lacked jurisdiction to hear a criminal tax case in which it

might determine the amount of tax loss. Punke wraps up these

novel arguments [*284] by asserting that the entire

proceeding violated his due process rights.

Punke’s innovative arguments entirely misperceive the

essential difference between limitations on the government's

power to proceed civilly against violators of the tax laws and

the government’s power (and court’s jurisdiction, see /8 U.S.C.

§ 3231) to seek criminal convictions of those who violate the

criminal laws. Nothing in the requirements of the civil tax

process or in the limitations on a court’s power to hear

declaratory judgment actions prevents the government from

bringing or the court from hearing a criminal tax case.

Nevertheless, we will examine Judge Mihm’s restitution order

to ensure that it comports with all requirements.

The judge ordered restitution using the powers conferred by

Congress under the Victim and Witness Protection Act

(“VWPA”) [**25] See /8 U.S.C. §§ 3663, 3664 (1996)

(made applicable to this case by /8 U.S.C. § 2248 (note of

19

effective date)). Under this circuit’s precedent, a government

agency—such as the IRS—dqualifies as a victim under the

VWPA. See United States v. Martin, 128 F.3d 1188, 1190-93

(7" Cir. 1997); United States v. Fountain, 768 F.2d 790, 802

(7 Cir. 1985). The VWPA empowers courts to impose

restitution as part of a sentence rather than just as a special

condition of probation. See Martin, 128 F.3d at 1190. Notably,

the VWPA does not authorize a court to order restitution for

Title 26 offenses—tax offenses. See United States vy.

Gottesman, 122 F.3d 150, 151 (2d Cir. 1997); United States v.

Stout, 32 F.3d 901, 905 (5" Cir. 1994). However, the statute

explicitly allows restitution for any violation of Title 18--

criminal offenses. Here, the jury convicted Punke and

Minneman of conspiracy under /8 U.S.C. § 37/. As the Second

Circuit explained in United States v. Helmsley, 94] F.2d 71,

/01 (1991), the VWPA applies because conspiracy is a separate

crime from the underlying predicate act, and nothing in the

statute limits a court’s power to order restitution after a

conviction .or conspiracy is [**26] recorded.

The only remaining question is whether the court properly

determined the amount of restitution. An examination of the

VWPA will help us considerably in answering this question. In

1996 Congress amended the VWPA by adding a panoply of

procedures to aid a district court in determining the amount of

loss. See Act of April 24, 1996, Pub. L. No. 104-132, Title II,

Subtitle A, § 206(a), 110 Stat. 1232. These amendments

demonstrate several important points: Congress contemplated

that a restitution order might require a district court to resolve

complex questions regarding the amount of loss. Notably,

Congress left the choice of procedures to the discretion of the

court. Crucially, Congress provided no limitations on the

court's authority to determine the appropriate amount of

20

restitution. In sum, the structure of the VWPA and especially

the 1996 amendments demonstrate a congressional intent to

provide an expansive and powerful remedy. See Martin, 128

F.3d at 1190 (explaining that the history of the VWPA is not

“marked by steady congressional erosion, but rather by constant

expansion of the restitution remedy”).

The amended VWPA provides several procedural options for

the court [**27] to obtain the evidence necessary to determine

the amount of restitution. The starting point is the presentence

report (or, at the court’s discretion, a separate report) providing

“information sufficient for the court to exercise its discretion in

fashioning a restitution order.” /8 U.S.C. § 3664(a). This report

includes “to the extent practicable, a complete accounting of

losses to each victim.” Id. If the judge finds the presentence

report lacking, “the court may require additional documentation

or hear testimony” to determine the amount of loss— §

3664(d)(4). If, 10 days before sentencing, the victim’s losses

remain unascertainable, the court shall postpone the final

determination of the amount of loss for up to 90 days. See §

3664(d)(S). The court may amend a restitution order if the

victim discovers additional losses and shows good cause for

failing to include those losses in the initial claim for

restitutionary relief. See id. And the court may refer any issue,

including the amount of loss, “to a magistrate judge or special

master for proposed findings of fact.” § 3664(d)(6).

[*285] In addition to these procedural options, the VWPA

spells out the standards for determining the amount [**28] of

restitution and the long-term effects of such an order. Foremost,

the statute gives the court the authority to resolve any dispute

over the amount of loss under a preponderance standard with

the burden of proof on the government. See § 3664(e). Once the

21

court determines the amount of loss, the statute directs the judge

to order restitution “in the fu'! amount of each victim’s losses.”

§ 3664(f)(1)(A). The statute empowers the court to make each

defendant liable for the full amount of loss or apportion the loss

among the defendants. See § 3664(h). The VWPA provides for

the reduction of any restitution order based on any recovery by

the victim from insurance or through civil proceedings. See §

3664(j). (Thus, addressing a concern raised by the dissent in

Helmsley. See 94/ F.2d at 107 (Oakes, C.J., dissenting).)

Finally, the law estops the defendant from “denying the

essential allegations” of the offense in any subsequent civil

proceeding brought by the victim. § 3664(1).

Although this circuit does not require specific findings of fact

to support a restitution award, we have urged district courts to

provide articulated findings in order to facilitate appellate

review. See United [**29] States v. Menza, 137 F.3d 533,

1998 WL 81628, at *5-6 (7 Cir. 1998). Importantly, while

detailed findings are preferable, they are not mandatory. See

United States v. Zaragoza, 123 F.3d 472, 479 n.5 (7° Cir.)

(citing several cases for the proposition that “this Court has

noted repeatedly that § 3664 does not require express findings

as to each and every factor”), cert. denied, /39 L. Ed. 2d 245,

118 S. Ct. 317 (1997). But if a district court does not provide

detailed findings, it runs the risk that we may remand a

restitution award based on “inadequate explanation and

insufficient reasoning.” See Menza, 137 F.3d 533, 1998 WL

81628, at *6.

Here, the district court determined that, for purposes of

restitution, the amount of tax loss differed from the amount of

loss used to calculate the offense level. The discrepancy arose

because Judge Mihm included approximately half of Mr

22

Punke’s alleged business deductions from gross income when

calculating the amount of loss for restitution while he rejected

consideration of the deductions when calculating the offense

level under the 1991 guidelines (see above). This split decision

is not the product of an inconsistent ruling, but rather a quirk

[**30] in the sentencing laws. Judge Mihm gave the

defendants a choice regarding which set of guidelines should

apply. The defendants chose the 1991 guidelines because those

rules resulted in a lower offense level even though they

prevented the defendants from taking deductions. When

determining the amount of restitution, however, Judge Mihm

allowed the defendants to take deductions. In sum, the

defendants received favorable treatment at each stage of the

proceeding. This incongruity does not undermine the validity of

the court’s restitution order. On the contrary. Judge Mihm

followed the VWPA by determining the actual amount of tax

loss—rather than applying an arbitrary formula from the 1991

guidelines—before ordering restitution. He conducted a hearing

afier he received the presentence report. He heard the

defendants on the issue of deductions. He issued a factual

finding, supported by the evidence, regarding the amount of loss

for purposes of restitution. He explained his reasoning on the

record. We ask for no more. Nothing in Judge Mihm’s decision

indicates inadequate explanation or insufficient reasoning.

But we add that this case does differ from most restitution

cases because it [**31] involves restitution for a tax loss. We

certainly know that the tax laws provide elaborate procedures

for determining a taxpayer’s civil liability. See 26 U.S.C. $$

2/12(a), 6213. And we recognize that many circuits, including

this one, once limited a district court’s power to order tax

restitution under the old Probation Act. See United States v.

Weber, 437 F.2d 1218 (7" Cir. 1971). Congress repealed the

yr’

23

Probation Act, however. It has now been replaced by the

VWPA and the federal sentencing guidelines. The amendments

to the VWPA evince a congressional intent to expand the

district court’s ability to determine the amount of restitution.

The statute contemplates that on occasion the district court may

need complex procedures to determine the amount of loss with

accuracy. [*286] Clearly, the statute grants the district court

the authority to determine when to invoke those procedures and

which of the many options to choose. We are sure that many

nontax cases may present far more difficult questions regarding

the amount of loss than commonly found in tax cases. Nothing

in the statute suggests that Congress contemplated special

procedures for tax loss or any other specific kind of loss. We,

therefore, [**32] review a district court’s choice of procedures

for determining the amount of loss and the court’s calculation of

the amount of restitution under the normal standard—abuse of

discretion. Typically, we examine the ruling to ensure that the

judge acted on accurate information, determined the amount of

loss with appropriate certainty, and provided the defendant with

an opportunity to be heard on the question of the amount of

loss. See United States v. Mischler, 787 F.2d 240, 247 ( ”” Cir.

1986).

In this case, apparently, Judge Mihm felt no need to avail

himself of the various novel approaches offered by the VWPA

At the sentencing hearing the judge determined the amount of

tax loss based on information from the parties and from the

presentence report. Nothing in this case leads us to believe that

Judge Mihm abused his discretion or stepped beyond his

statutory powers in determining the amount of restitution

For the foregoing reasons, we AFFIRM the conviction and

sentences of Clarence Punke and Joseph Minneman

24

APPENDIX B --- ORDER OF THE UNITED STATES

COURT OF APPEALS FOR THE SEVENTH CIRCUIT

ISSUED MAY 26, 1998

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Before

Hon. Walter J. Cummings, Circuit Judge

Hon. William J. Bauer, Circuit Judge

Hon. Terence T. Evans, Circuit Judge

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

No. 97-2676

V.

JOSEPH C. MINNEMAN and CLARENCE G. PUNKE,

Defendants-Appellants.

Appeal from the United States District Court for the Central

District of Illinois.

No. 96-10010

Michael M. Mihm, Chief Judge.

25

ORDER

On May 1, 1998, defendant-appellant Clarence G. Punke

filed a petition for rehearing with suggestion for rehearing en

banc. All the judges on the original panel have voted to deny

the petition, and none of the active judges have requested a vote

on the suggestion for rehearing en banc. The petition is

therefore DENIED.

26

APPENDIX C --- LETTER OF THE CLERK OF THE

SUPREME COURT OF THE UNITED STATES

EXTENDING TIME TO FILE PROPER PETITION FOR

WRIT OF CERTIORARI

SUPREME COURT OF THE UNITED STATES

OFFICE OF THE CLERK

WASHINGTON, DC 20543

WILLIAM hk. SUTER AREA CODE 202

CLERK OF THE COURT 479-3011

September 1, 1998

Clarence G. Punke

c/o J. Hamilton McMenamy

Suite 6010 LB #65

8500 N. Stemmons Expressway

Dallas, TX 75247

RE: Clarence G. Punke v. Untied (sic) States

Dear Mr. Punke

Returned are 9 of the 10 copies of a petitio (sic) nfor

(sic) a writ of certiorari in the above-entitled case postmarked

on August 24, 1998 and received on August 26, 1998, which

fails to comply with the Rules of this Court,

If you intend to pay the $300 docket fee, the petition

must be on paper that is 6 1/8 by 9 1/4 inches as stated in Rule

33.1(d)

27

The appendix to the petition as required by Rule !4 must

be on paper that is 6 1/8 by 9 1/4 inches as stated in Rule

33.1(d).

The petition must bear a suitable cover consisting of

heavy paper, front and back. Rule 33.1(e)

Rule 33.1(c) prohibits the use of spiral, plastic, metal or

string bindings. Staples may be used, at least two, along the left

margin covered with tape.

The proof of service must be separate from the petition,

not within it. See Rule 29.5

The order denying rehearing must be included in the

appendix as required by Rule 14. 1(i)(iii)

The text of the petition and appendix must appear on

both sides of the pages. Rule 33.1(b)

The questions presented for review must appear with no

other information or text on the same page. Rule 14

You must submit 40 copies of a petition for a writ of

certiorari when paying the docket fee. Rule 33. 1(f)

Kindly redo the petition and appendix so that it complies

in all respects with the Rules of the Court and return it to this

office promptly so that it may be docketed. Unless the petition

is received by this office in corrected form within 60 days of the

date of this letter, the petition will not be filed. Rule 14.5

28

This office shall retain one copy of the petition and your

money order in the amount of $300.00 in expectation of receipt

of a properly prepared petition

Enclosed is a copy of the Rules of the Court and

memorandum concerning the preparation of a petition

Sincerely,

William K. Suter, Clerk

By

/s/

Ruth Jones

(202) 479-3022

29

APPENDIX D --- AMENDED JUDGMENT OF THE

DISTRICT COURT

AQ245C (Rev. 3/95) Sheet 1 - Amended Judgment in a Criminal Case

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF ILLINOIS

UNITED STATES OF AMERICA

.

CLARENCE G. PUNKE

AMENDED JUDGMENT IN A CRIMINAL CASE

(For Offenses Committed On or After November 1, 1987)

Case Number 1:96CR10010-001

Daniel O’ Day, Esquire,

Defendant’s Attorney

Date of Original Judgment: 06/23/97

Reason for Amendment

Correction of Sentence for Clerical Mistake

ENTERED: October 9, 1997

THE DEFENDANT

Was found guilty on count(s) 1 — 4 after a plea of not guilty

30

Title & Section 18 U.S.C. § 371

Nature of Offense Conspiracy to Commit Income Tax

Fraud

Date Offense concluded 04/15/1992

Count Number(s): l

Title & Section 26 U.S.C. § 7206(1)

Nature of Offense _‘ Filing false income tax return

Date Offense Concluded 04/15/1990

Count Number(s): 2

Title & Section 26 U.S.C. § 7206(1)

Nature of Offense _‘ Filing false income tax return

Date Offense Concluded 04/15/1991

Count Number(s): 3

Title & Section 26 U.S.C. § 7206(1)

Nature of Offense _ Filing false income tax return

Date Offense Concluded 04/15/1992

Count Number(s): 4

31

| The defendant is sentenced as provided in pages 2

through 6 of this judgment. The sentence is imposed pursuant

. to the Sentencing reform Act of 1984.

[For purposes of this Appendix, and in order to reflect as

accurately as possible the original document;

() -- not adopted by the court, and

X — adopted by the court.|

LU The defendant has been found not guilty on count(s) >

() Count(s) (is)(are) dismissed on the motion of the

United States.

IT IS FURTHER ORDERED that the defendant shall

notify the United States Attorney for this district within 30 days

of any change of name, residence, or mailing address until all

fines, restitution, costs, and special assessments imposed by the

judgment are fully paid.

Defendant’s Soc. Sec. No.: 357-36-3874

Defendant’s Date of Birth 11/11/1943

Defendant’s USM No.: 10800-026

Defendant’s Residence Address 107 Mount Zion

Eureka, IL 61530

Defendant’s Mailing Address 107 Mount Zion

Eureka, IL 61530

Date of Imposition of Judgment 10/09/1997

32

Signature of Judicial Officer: /s/

Name & Title of Judicial Officer: Michael M. Mihm, Chief

US District Judge

A TRUE COPY

ATTEST: JOHN M. WALTERS,

CLERK

BY: /S/ H. Williams

DEPUTY CLERK

Date: 10/9/97

AO245C (Rev. 3/95) Amended Judgment in a Criminal Case Sheet 2 -

Imprisonment

(Note: Identify Changes with Asterisks (*))

Judgment-Page 2 of 6

DEFENDANT: CLARENCE G. PUNKE

CASE NUMBER: 1:96CR10010-001

IMPRISONMENT

The defendant is hereby committed to the custody of the

United States Bureau of Prisons to be imprisoned for a total

term of 21 month(s).

X The court makes the following recommendations to the

Bureau of Prisons:

33

1) Dft be placed in a minimum /low security camp

facility. 2) Dft be located as close to family in

Peoria, IL as possible.

4 The defendant is remanded to the custody of the United

States Marshal.

L The defendant shall surrender to the United States

Marshal for this district:

+ at a.m./p.m. on

+ as notified by the United States Marshal.

X The defendant shall surrender for service of sentence

at the institution designated by the Bureau of Prisons.

X before 2 p.m. on 07/21/1997

L as notified by the United States Marshal.

L as notified by the Probation of Pretrial Services

Office.

RETURN

I have executed this judgment as follows:

Defendant delivered on to

at

with a certified copy of this judgment.

34

UNITED STATES MARSHAL

By:

Deputy U.S. Marshal

AOQ24S5C (Rev. 3/95) Amended Judgment in a Criminal Case Sheet 3 -

Supervised Release

(Note: Identify Changes with Asterisks (*))

Judgment-Page 3 of 6

DEFENDANT. CLARENCE G. PUNKE

CASE NUMBER: 1:96CR10010-001

SUPERVISED RELEASE

Upon release from imprisonment, the defendant shall be on

supervised release for a term of 3 year(s) on Count 1; 1 year

on each of Counts 2 — 4. Said terms to run concurrent.

The defendant shall report to the probation office in the

district to which the defendant is released within 72 hours of

release from the custody of the Bureau of Prisons.

The defendant shall not commit another federal, state, or local

crime.

The defendant shall not illegally possess a controlled substance

For offenses committed on or after September 13, 1994:

35

The defendant shall refrain from any lawful use of a

controlled substance. The defendant shall submit to one drug

test within 15 days of release from imprisonment and at least

two periodic drug tests thereafter, as directed by the probation

officer.

+ The above drug testing condition is suspended

based on the court’s determination that the defendant poses a

low risk of future substance abuse. (Check, if applicable. )

» 4 The defendant shall not possess a firearm as

defined in 18 U.S.C. § 921. (Check, if applicable.)

If this judgment imposes a fine or a restitution

obligation, it shall be a condition of supervised release that the

defendant pay any such fine or restitution that remains unpaid at

the commencement of the term of supervised release in

accordance with the Schedule of Payments set forth in the

Criminal Monetary Penalties sheet of this judgment.

The defendant shall comply with the standard conditions

that have been adopted by this court (set forth below). The

defendant shall also comply with the additional conditions on

the attached page (if indicated below)

sy

See Special Conditions of Supervision - Sheet 3.01]

STANDARD CONDITIONS OF SUPERVISION

1) the defendant shall not leave the judicial district without

the permission of the court or probation officer;

3)

4)

10)

36

Se

the defendant shall report to the probation officer and

shall submit a truthful and complete written report

within the first five days of each month;

the defendant shall answer truthfully all inquiries by the

probation officer and follow the instructions of the

probation officer,

the defendant shall support his or her dey endants and

meet other family responsibilities;

the defendant shall work regularly at a_ lawful

occupation unless excused by the probation officer for

schooling, training, or other acceptable reasons;

the defendant shall notify the probation officer ten days

prior to any change in residence or employment,

the defendant shall refrain from excessive use of

alcohol;

the defendant shall not frequent places where controlled

substances are illegally sold, used, distributed, lor

administered,

the defendant shall not associate with any persons

engaged in criminal activity, and shall not associate with

any person convicted of a felony unless granted

permission to do so by the probation officer,

the defendant shall permit a probation officer to visit

him at any time at home or elsewhere and shall permit

confiscation of any contraband observed in plain view of

the probation officer;

the defendant shall notify the probation officer within 72

hours of being arrested or questioned by a law

enforcement officer,

the defendant shall not enter into any agreement to act as

an informer or a special agent of a law enforcement

agency without the permission of the court,

|

37

13) as directed by the probation officer, the defendant shall

notify third parties of risks that may be occasioned by

the defendant’s criminal record or personal history or

characteristics, and shall permit the probation officer to

make such notifications and to confirm the defendant’s

compliance with such notification requirements.

AO245C (Rev. 3/95) Amended Judgment in a Criminal Case Sheet 3 -

a Supervised Release

DEFENDANT: CLARENCE G. PUNKE

CASE NUMBER: 1:96CR10010-00]

SPECIAL CONDITIONS OF SUPERVISION

1) You shall provide the probation officer access to any

requested financial information including both your business

and personal income tax returns.

2) You shall not own, purchase, or possess a firearm,

ammunition, or other dangerous weapon

Judgment Sheet 3.01) |

AOQ245C (Rev. 3/95) Amended Judgment in a Criminal Case Sheet 5, Part

A — Criminal Monetary Penalties

(NOTE: Identify Changes with Asterisks (*))

Judgment-Page 4 of 6

DEFENDANT: CLARENCE G. PUNKE

CASE NUMBER: 1:96CR10010-001

38

CRIMINAL MONETARY PENALTIES

The defendant shall pay the following total criminal

monetary penalties in accordance with the schedule of payments

set forth on Sheet 5, Part B.

Assessment Fine Restitution

Totals $ $ $ 154,800.00

+ If applicable, restitution amount ordered pursuant to plea

agreement. __. Rc S ea Reh t D Moc aang Lhe it

FINE

The above fine includes costs of incarceration and/or

supervision in the amount of $

The defendant shall pay any interest on any fine of more

than $2,500, unless the fine is paid in full before the fifteenth

day after the date of judgment, pursuant to 18 U.S.C. § 3612(f).

All of the payment options on Sheet 5, Part B may be subject to

penalties for default and delinquency pursuant to 18 USC §

3612(g).

J The court determined that the defendant does not have

the ability to pay interest and it is ordered that:

4 The interest requirement is waived.

The interest requirement is modified as follows:

39

RESTITUTION

a The determination of restitution is deferred in a

case brought under Chapters 009A. 110, 110A, and 113A of

title 18 for offenses committed on or after 09/13/1994. until

. An Amended Judgment in a Criminal Case will

be entered after such determination

X The defendant shall make restitution to the

following payee in the amounts listed below.

If the defendant makes a partial payment, each payee

Shall receive an appropriately proportional payment unless

specified otherwise in the priority order or percentage payment

column below

Name of Payee

Internal Revenue

Priority Order

or

**Total Amount of Percentage of

Amount of Loss Restitution Ordered Payment

$154,800.00 $154.800.00

Totals: $154,800.00 $154,800.00

**Findings for the total amount of losses are required under

Chapter 109A, 110, 110A, and 113A of Title 18 for offenses

committed on or after September 13. 1994

AO245C (Rev. 3/95) Amended Judgment in a Criminal Case Sheet 5. Part B

~ Criminal Monetary Penalties

40

(NOTE: Idenufy Changes with Astensks (*))

Judgment-Page 5 of 6

DEFENDANT: CLARENCE G. PUNKE

CASE NUMBER 1:96CR10010-001

SCHEDULE OF PAYMENTS

Payments shall be applied in the following order (1)

assessments, (2) restitution, (3) fine principal; (4) cost of

prosecution, (5) interest, (6) penalties

Payment of the total fine and other criminal monetary

penalties shall be due as follows:

A X in full immediately, or

B v $ immediately, balance due (in

accordance with C,D, or E); or

C + not later than or

D ut in installments to commence day(s) after

the date of this judgment. In the event the entire amount of

criminal monetary penalties imposed is not paid prior to the

commencement of supervision, the U.S. probation officer shall

pursue collection of the amount due, and shall request the court

to establish a payment schedule if appropriate; or

E v in (e.g. equal, weekly, monthly,

quarterly) installments of $ over a period of

year(s) to commence day(s) after the

date of this judgment

4]

The National Fine Center will credit the defendant for

all payments previously made toward any criminal monetary

penalties imposed. Special instructions regarding the payments

of criminal monetary penalties

[none noted] ve

L The defendant shall pay the cost of prosecution

a The defendant shall forfeit the defendant’s

interest in the following property to the United States

[none noted]

Unless the court has expressly ordered otherwise in the

special instructions above, if this judgment imposes a period of

imprisonment payment of criminal monetary penalties shall be

due during the period of imprisonment. All criminal monetary

penalty payments are to be made to the United States Courts

National Fine Center, Administrative Office of the United

States Courts, Washington, DC 30544, except those payments

made through the Bureau of Prisons’ Inmate Financial

Responsibility Program. If the National Fine Center is not

operating in this district, all criminal monetary penalty

payments are to be made as directed by the court, the probation

officer, or the United States attorney.

AO245C (Rev. 3/95) Amended Judgment in a Criminal Case Sheet G -

Statement of Reasons

(NOTE: Identify Changes with Asterisks (*))

Judgment-Page 6 of 6

DEFENDANT CLARENCE G. PUNKE

CASE NUMBER |-96CR10010-001

STATEMENT OF REASONS

The court adopts the factual findings and guideline

application in the presentence report

OR

X The court adopts the factual findings and guideline

application in the presentence report except (see attachment, if

necessary)

Guideline Range Determined by the Court:

Total Offense Level 16

Criminal History Category |

Imprisonment Range 21 to 27 months

Supervised Release Range 2 to 3 years

Fine Range $5,000.00 to #50,000.00

X Fine waived or below the guideline range because of

inability to pay

Total amount of restitution $258.3469]

43

Comm

O) Restitution is not ordered because the complication and

prolongation of the sentencing process resulting from the

fashioning of a restitution order outweighs the need to provide

restitution to any victims, pursuant to 18 U.S.C. § 3663(d).

0 For offenses that require the total amount of loss to be

states, pursuant to Chapters 109A, 110, 110A, and 113A of

Title 18, restitution is not ordered because the economic

circumstances of the defendant do not allow for the payment of

any amount of a restitution order, and do not allow for the

payment of any or some portion of a restitution order in the

foreseeable future under any reasonable schedule of payments

X Partial restitution is ordered for the following reason(s)

Restitution amount skewed by failure to reflect

reduction for expenses.

X The sentence is within the guideline range, that range

does not exceed 24 months, and the court finds no reason to

depart from the sentence called for by the application of the

guidelines.

OR

U The sentence is within the guideline range, that range

exceeds 24 months, and the sentence is imposed for the

following reason(s):

OR

The sentence departs from the guideline range:

Wu

ont

upon motion of the government, as a result of

defendant’s substantial assistance.

0 for the following specific reason(s): [FINIS]

APPENDIX E --- 26 USC § 6213(a) - RESTRICTIONS

APPLICABLE TO DEFICIENCIES; PETITION TO TAX

COURT

(a) Time for filing petition and restrictions on assessment.

Within 90 days, or 150 days if the notice is addressed to a

person outside the United States, after the notice of

deficiency authorized in section 6212 is mailed (not

counting Saturday, Sunday, or a legal holiday in the District

of Columbia as the last day), the taxpayer may file a

petition with the Tax Court for a redetermination of the

deficiency. Except as otherwise provided in section 6851,

6852, or 6861 no assessment of a deficiency in respect of

any tax imposed by subtitle A or B, chapter 41, 42, 43,

or 44 and no levy or proceeding in court for its

collection shall be made, begun, or prosecuted until

such notice has been mailed to the taxpayer (emphasis

added), nor until the expiration of such 90-day or 150-day

period, as the case may be, nor, if a petition has been filed

with the Tax Court, until the decision of the Tax Court has

become final. Notwithstanding the provisions of section

7421(a), the making of such assessment or the beginning of

such proceeding or levy during the time such prohibition is

in force may be enjoined by a proceeding in the proper

court, including the Tax Court. The Tax Court shall have

no jurisdiction to enjoin any action or proceeding under this

subsection unless a timely petition for a redetermination of

the deficiency has been filed and then only in respect of the

deficiency that is that is the subject of such petition.