Tax Fraud — Prison Sentences of 1 Year or More, July 2008

The latest available data from the Justice Department show that during July 2008 the government reported 23 new tax fraud prison sentences of 1 year or more. According to the case-by-case information analyzed by the Transactional Records Access Clearinghouse (TRAC), this number is down 14.8 percent over the previous month.

The comparisons of the number of defendants convicted are based on case-by-case information obtained by TRAC under the Freedom of Information Act from the Executive Office for United States Attorneys. (See Table 1)

About These Reports For many years, Tax Analysts and the Transactional Records Access Clearinghouse (TRAC) have vigorously exercised their rights under the Freedom of Information Act to obtain authoritative information from the IRS. Although the two public interest organizations have had a somewhat different focus, the ultimate goal was the same: to better understand how the IRS was going about achieving its difficult mission. Now TRAC and Tax Analysts have joined forces to offer a new series of monthly reports on a range of enforcement subjects, beginning with the use of the government's criminal powers. Forthcoming will be monthly reports on tax audits, collections and other related issues. In addition, more detailed information, obtained by following the "More" links, will be available at no cost for the first six months.

When monthly 2008 prison sentences of 1 year or more of this type are compared with those of the same period in the previous year, the number of convictions was down 3.8 percent. However, prison sentences of 1 year or more over the past year are still much higher than they were five years ago. Overall, the data show that prison sentences of 1 year or more for tax fraud are up 45.2 percent from levels reported in 2003.

The increase from the levels five years ago in tax fraud prison sentences of 1 year or more is shown more clearly in Figure 1. The vertical bars in Figure 1 represent the number of tax fraud prison sentences of 1 year or more recorded on a month-to-month basis. The superimposed line on the bars plots the six-month moving average so that natural fluctuations are smoothed out. The one and five-year rates of change in Table 1 and in the sections that follow are all based upon this six-month moving average.

Figure 1: Criminal Tax Fraud Prison Sentences of 1 Year or More since January 2001

Figure 2: Prison Sentences of 1 Year or More
by Investigative Agency

In July 2008, the IRS was recorded as the lead investigative agency for 20 of the tax fraud cases which resulted in prison sentences of 1 year or more, or 87 percent of the total. The only other agencies with tax fraud convictions which resulted in sentences of a year or more were Other Department of Justice (9 percent) and FBI (4 percent). See Figure 2.

Tax Fraud Prison Sentences of 1 Year or More in U.S. District Courts

Top Ranked Lead Charges

Table 2 shows the top lead charges recorded in the prison sentences of 1 year or more of tax fraud matters filed in U.S. District Court during July 2008.

• "Fraud and False statements" (Title 26 U.S.C Section 7206) was the most frequently recorded lead charge.

• Ranked second in frequency was the lead charge "Attempt to evade or defeat tax" under Title 26 U.S.C Section 7201.

• Ranked third was "Conspiracy to commit offense or to defraud US" under Title 18 U.S.C Section 371.

Top Ranked Judicial Districts

In July 2008 the Justice Department said the government obtained 9.2 tax fraud prison sentences of 1 year or more for every ten million people in the United States.

Understandably, there is great variation in the number of tax fraud convictions in each of the nation's ninety-four federal judicial districts.

The districts registering the largest number of prison sentences of 1 year or more of this type last month are shown in Table 3.

• The District of Maryland—with 3 prison sentences of 1 year or more—was the most active during July 2008.

• The Northern District of Georgia (Atlanta) and Eastern District of Pennsylvania (Philadelphia) ranked second.

Top Ranked District Judges

At any one time, there are about 680 federal District Court judges working in the United States. The judges recorded with the largest number of new tax fraud crime cases resulting in convictions of this type during July 2008 are shown in Table 4.

All 18 of the top judges were in districts which were in the top ten with the largest number of tax fraud convictions. (Because of ties, there were a total of 18 judges in the "top ten" rankings.)

• Judge Anita Blumstein Brody in the Eastern District of Pennsylvania (Philadelphia) ranked first with 2 convicted in tax fraud convictions.

• Judges Beverly B. Martin in the Northern District of Georgia (Atlanta), William Clark O'Kelley in the Northern District of Georgia (Atlanta), Berry Avant Edenfield in the Southern District of Georgia (Savannah), Thomas B. Russell in the Western District of Kentucky (Louisville), Deborah K. Chasanow in the District of Maryland, Andre Maurice Davis in the District of Maryland, Roger W. Titus in the District of Maryland and William G. Young in the District of Massachusetts were among the judges ranked second with one tax fraud conviction each.