United States v. Jennings

Simple tax fraud involving “sophisticated means” warrants a two-level sentencing enhancement upon conviction.

Thomas Jennings and David Feuerborn (“Defendants”) were convicted of “conspiring to defraud the United States” by failing to report certain income to the Internal Revenue Service. The suggested sentencing report recommended a “two-level enhancement” based on Defendants’ use of “sophisticated means” to accomplish their crime. Subsequently, the district court agreed to the enhancement and both Defendants were sentenced to 48 months in prison. The Ninth Circuit affirmed the district court’s ruling after finding that the Defendants’ acts were consistent with the “sophisticated means” required for the two-level enhancement upon their convictions. While depositing company funds into personal accounts through a duplicate bank account could have been lawful through a legitimate account, the combination of the deceptive account name and their personal use “involved sophisticated means,” was “especially complex” and “especially intricate.” Defendants contended that because the account was not opened under a false name and they used Jenning’s legitimate social security number, the concealment was not so sophisticated and anyone could have found the account. The panel disagreed because the Defendants’ actions displayed a more in depth plan to conceal than if they were merely trying to evade paying taxes. The panel also rejected the Defendants’ other argument that they were using the account for legitimate purposes because even though the payments were lawful, the use of the account was not. Therefore, the panel held that the two-level enhancement on their convictions was appropriate. AFFIRMED.