Opinion ID: 2971526
Heading Depth: 2
Heading Rank: 1

Heading: “Loans rather than income” defense

Text: Defendants argue that the government presented insufficient evidence to convict them because the payments they received through their scheme were loans, not income. While the jury -2- Nos. 03-3593, 03-3615, 03-3710 United States of America v. Woodman could have reached that conclusion, sufficient evidence supported their contrary conclusion that the payments were income, not loans. Though Thomas Warholic testified that Defendants considered their payments from WeShare to be loans, the circumstances of the payments lacked any of the usual indicia of a repayment obligation. WeShare’s bookkeeper testified that she issued checks for “consulting fees” to Robert and Carl Woodman, without characterizing these payments as loans. Warholic testified that Defendants planned for WeShare to eventually forgive the putative loans and pay the taxes on them at that time. But other testimony from Warholic casts doubt on whether the taxes would ever be paid. For example, he agreed that he “felt funny” about “avoiding taxes” through the plan. And when asked, “The plan was not ever to rip off Uncle Sam was it, just designed to delay?” he testified, “I think I knew deep down I was doing it.” With this evidence considered in the light most favorable to the government, the jury could have concluded beyond a reasonable doubt that the payments to Defendants were not loans, but were instead a means to permanently avoid paying taxes.