Federal Judges Increasingly Going Easy on Sentencing Tax Cheats

Tuesday, May 20, 2014
H. Ty Warner at sentencing hearing for tax evasion (photo: Andrew A. Nelles, AP)

Those convicted of not paying their income taxes stand a good chance of getting comparatively light prison sentences, as federal judges increasingly ignore federal sentencing guidelines.


Last year, 45% of convicted tax cheats received sentences that were less than what the U.S. Sentencing Commission recommended, according to Forbes. Comparatively, only 28% of embezzlers and 22% forgers or counterfeiters got off with lighter-than-recommended sentences.


Federal judges have been going easier on tax cheats when a ruling on U.S. vs. Booker by the U.S. Supreme Court that said federal sentencing guidelines were just that—guidelines—and that judges could ignore them.


Scott Schumacher, law professor at the University of Washington, told Forbes as long as judges make “noises about calculating the guidelines, they can come up with their own numbers, and they can base it on anything they want.”


This practice came under scrutiny earlier this year when Chicago Federal District Court Judge Charles P. Kocoras gave probation to billionaire H. Ty Warner for stashing more than $100 million in overseas bank accounts to avoid paying the Internal Revenue Service.


Sentencing guidelines say Warner, 69, who got rich by creating Beanie Babies, should have gone to jail for 46 to 57 months. Instead, he won’t serve a day behind bars, unless prosecutors successfully appeal Kocoras’ decision.


In Warner’s case, the judge was apparently swayed by arguments made by his defense counsel, including that he had already paid $53 million in fines for failing to file required reports regarding his business in foreign banks and that he had been humiliated by the trial. “[T]he public humiliation and reproachment Mr. Warner has experienced is manifest. Only he knows the private torment he has suffered by the public condemnation directed at him.”

-Noel Brinkerhoff


To Learn More:

Federal Judges Are Cutting Rich Tax Cheats Big Sentencing Breaks (by Janet Novack, Forbes)

Sentencing in Tax Cases after Booker: Striking the Right Balance between Uniformity and Discretion (by Scott A. Schumacher, Villanova Law Review)

Major Swiss Bank Secretly Cultivated Thousands of U.S. Tax Evaders (by Noel Brinkerhoff, AllGov)



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