Opinion ID: 3066115
Heading Depth: 3
Heading Rank: 6

Heading: Robert Kahre’s Sentence

Text: Kahre challenges the district court’s calculation of his adjusted offense level and of the applicable guideline range, UNITED STATES V. KAHRE 51 both of which were largely attributable to the tax loss associated with his crimes of conviction. “The government bears the burden of establishing the base offense level, and, hence, here, the amount of tax loss, by a preponderance of the evidence.” United States v. Montano, 250 F.3d 709, 713 (9th Cir. 2001) (citation omitted). “Under the preponderance of the evidence standard, the relevant facts must be shown to be more likely true than not.” Id. (citations and internal quotation marks omitted). “In determining the total tax loss attributable to the offense, all conduct violating the tax laws should be considered as part of the same course of conduct or common scheme or plan unless the evidence demonstrates that the conduct is clearly unrelated.” Bishop, 291 F.3d at 1115 (citation and alteration omitted). “Tax loss is determined from the reasonably foreseeable conduct of all co-actors, not just the defendant’s own conduct. . . .” Id. (citation and alteration omitted). Kahre asserts that, because his workers were independent contractors, the district court erred in calculating a tax loss premised on payroll taxes for employees. The IRS has established a twenty-factor test to differentiate an employee from an independent contractor for tax purposes. See IRS Rev. Rul. 87-41 (1987).21 21 The factors include: (1) the employer’s right to require the worker’s compliance with instructions; (2) the employer’s training requirements; (3) the integration of the worker’s services into the employer’s business; (4) the worker’s personal rendering of services; (5) the employer’s hiring, supervision, and payment of assistants; (6) a continuing relationship between the employer and the worker; (7) the employer’s setting of hours; (8) the employer’s requirement of full-time service; (9) performance of 52 UNITED STATES V. KAHRE “[G]enerally the relationship of employer and employee exists when the person or persons for whom the services are performed have the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. . . .” Id. “Thus, if such a relationship exists, it is of no consequence that the employee is designated as a partner, coadventurer, agent, independent contractor, or the like.” Id. The trial testimony amply supports the district court’s finding that Kahre’s employees were not independent contractors. Rodriguez testified at length regarding the control Kahre exercised over his employees’ work, and expressly acknowledged that the employees were not independent contractors. The district court instructed the jury that it was required to apply the twenty-factor test and determine whether Kahre’s workers were employees or independent contractors. Having followed that instruction, the jury found Kahre guilty on all counts. Given the evidence and the jury’s findings from that evidence, the district court did not err in finding that Kahre failed to pay the requisite payroll taxes for his employees, or in calculating the amount work on the employer’s premises; (10) the worker’s performance of services in a sequence set by the employer; (11) the employer’s requirement that the worker submit oral or written reports; (12) payments on an hourly, weekly, or monthly basis; (13) the employer’s payment of business or travel expenses; (14) the employer’s furnishing of materials or tools; (15) lack of significant investment in the facilities by the worker; (16) lack of realization of loss or profit by the worker; (17) lack of work for multiple firms by the worker; (18) lack of availability of the worker’s services to the general public; (19) the employer’s right to discharge the worker; and (20) the worker’s right to terminate her or his services. See IRS Rev. Rul. 87-41. UNITED STATES V. KAHRE 53 of loss from the tax scheme. See Bishop, 291 F.3d at 1115 (reasoning that tax loss is to be calculated in view of the totality of the tax evasion scheme).22 Kahre maintains that he was not responsible for withholding taxes from wages paid to employees of the thirty-five businesses that utilized his payroll services. However, “[i]n determining the total tax loss attributable to the offense, all conduct violating the tax laws should be considered as part of the same course of conduct or common scheme or plan unless the evidence demonstrates that the conduct is clearly unrelated. . . .” Id. (citation and alteration omitted) (emphasis added). Kahre was responsible for “the reasonably foreseeable conduct of all co-actors, not just [his] own conduct. . . .” Id. This means that Kahre was indeed responsible for the conduct of the businesses that utilized his payroll services, particularly since trial testimony revealed that Kahre devised these payroll services, and administered them in the same illicit manner as his own. The district court, therefore, did not err in determining it was more likely than not that the tax loss incurred from these utilizing companies was attributable to Kahre. 22 Kahre maintains that two of his several hundred employees were independent contractors as noted in their plea agreements. However, classification of two individuals as independent contractors would not undermine the district court’s findings regarding the status of the overwhelming majority of the employees. See Montano, 250 F.3d at 713 (“Under the preponderance of the evidence standard, the relevant facts must be shown to be more likely true than not.”) (citations and internal quotation marks omitted). Given the trial testimony reflecting the extensive nature of Kahre’s payroll scheme involving several hundred employees, Kahre’s argument is unavailing. 54 UNITED STATES V. KAHRE Contrary to Kahre’s assertions, the evidence elicited during trial also supports the district court’s adoption of the calculation in the PSR of a total tax liability of $57,435,803.52. The total tax liability included $51,739,337.52 in unpaid payroll taxes and $5,696,466.10 Kahre owed in income taxes from 1992 to 2008. Agent Rickey testified that Kahre earned unreported income of $10,758,167.32 in fees from his payroll services, and Agent Cutler calculated that Kahre earned unreported income of $1,956,739 from his companies. These figures more than sufficiently support the district court’s tax liability determination.23 Kahre next takes issue with the obstruction of justice enhancement, arguing that he did not attempt to conceal his gold and silver payroll system from the IRS, testified honestly about his failure to pay his personal income taxes, and had a good faith belief that his activities were legal. However, the obstruction of justice enhancement was premised on Kahre’s false trial testimony. The indictment alleged that Kahre engaged in a conspiracy to defraud the IRS by placing “real property, which he in fact owned, controlled 23 Kahre also appears to challenge the amount of restitution stemming from the calculation of his total tax liability. Although Kahre asserts that there was no factual basis for the restitution amount, the PSR explained that the $16,000,000 restitution amount was calculated from $5,168,313 due in income taxes and $10,891,791.72 due in payroll taxes. Because the district court properly determined Kahre’s tax liability using these figures, Kahre cannot establish clear error in similarly calculating the restitution amount. See United States v. Yeung, 672 F.3d 594, 600 (9th Cir. 2012) (“We review factual findings supporting an order of restitution for clear error.”) (citation omitted); see also United States v. Jenkins, 884 F.2d 433, 440 (9th Cir. 1989) (observing that restitution is based on the total tax liability). UNITED STATES V. KAHRE 55 and otherwise benefitted from, located at 6295 Grand Canyon Drive, Las Vegas, Nevada, in the name of a nominee, specifically defendant Danille D. Cline.” During trial, Kahre testified that he could not have signed a false loan application on behalf of Cline in Las Vegas on September 11, 2001, because he was in Oregon on that date. Kahre’s testimony was belied by currency transaction reports reflecting that Kahre cashed checks for $65,000, $143,918, and $26,031 around that date in Las Vegas. The PSR recommended an obstruction enhancement because Kahre “provided materially false information while testifying at trial.” In support of the PSR’s recommendation, the government argued that “[t]he enhancement relates to the false testimony that . . . Kahre made at trial concerning his whereabouts on September 11, 2001, the day when he and defendant Cline met with Tom Browne to sign a false home loan application for the purchase of 6295 N. Grand Canyon Drive.” The district court adopted the PSR’s recommendation and held that the obstruction of justice enhancement was supported “by more than a preponderance of the evidence, in fact, by clear and convincing evidence . . .” Kahre does not effectively rebut the district court’s finding that he committed perjury when he testified. See United States v. Armstrong, 620 F.3d 1172, 1176 (9th Cir. 2010) (“A witness commits perjury if he gives false testimony under oath or affirmation, concerning a material matter, with the willful intent to provide false testimony, rather than as a result of confusion, mistake, or faulty memory. The sentencing judge need only find by a preponderance of the evidence that the defendant committed perjury.”) (citations, footnote reference, and internal quotation marks omitted). The district court’s obstruction of justice enhancement is not negated because Kahre terminated his payroll system after 56 UNITED STATES V. KAHRE the district court ruled that it was illegal. As discussed, there was ample legal precedent establishing the illegality of Kahre’s conduct prior to the district court’s ruling to that effect. Unsurprisingly, the district court relied on that existing legal precedent to formulate its conclusion that Kahre’s conduct was illegal. Kahre continued to use the gold and silver coins after the search warrants were executed, and apparently only ceased use of his scheme after being indicted. We affirm the district court’s calculation of the guidelines range and its related determination of the restitution amount.24 Kahre’s argument that his sentence is disproportionate is not persuasive. “The district court was not required to conform the sentence to those imposed in similar cases . . . Although comparability is a legitimate sentencing factor, divergence from sentences imposed in similar cases is permissible so long as the court is attentive to relevant sentencing factors, as the district court was here.” United States v. Burgum, 633 F.3d 810, 813–14 (9th Cir. 2011) (citation omitted). “A district court need not, and, as a practical matter, cannot compare a proposed sentence to the sentence of every criminal defendant who has ever been sentenced before. Too many factors dictate the exercise of sound sentencing discretion in a particular case to make the inquiry [Kahre] urges helpful or even feasible. . . .” United States v. Treadwell, 593 F.3d 990, 1012 (9th Cir. 2010) (citation omitted). Kahre’s below-guidelines sentence 24 Because the district court did not clearly err when it enhanced Kahre’s sentence for obstruction of justice, Kahre cannot establish clear error in the court’s rejection of a downward adjustment for acceptance of responsibility. See Rosas, 615 F.3d at 1066–67 (explaining that an obstruction of justice enhancement “ordinarily indicates” that the defendant has failed to accept responsibility). UNITED STATES V. KAHRE 57 imposed for the extensive illegal payroll scheme with its associated tax loss, was comparable to sentences for similar crimes, and was reasonable. See United States v. Bendtzen, 542 F.3d 722, 729 (9th Cir. 2008) (“Because a Guidelines sentence will usually be reasonable, [Kahre’s] belowGuidelines sentence, supported by the district court’s specific reasoning, is reasonable.”) (citation and internal quotation marks omitted).