Court Opinion

ID: 3218329
Source: CourtListenerOpinion
Date Created: 2016-06-29 19:01:36.284891+00
Date Added: 2024-06-11T08:39:43.996444
License: Public Domain

FILED
                                                              United States Court of Appeals
                                                                      Tenth Circuit
                      UNITED STATES COURT OF APPEALS
                                                                      June 29, 2016
                                   TENTH CIRCUIT
                                                                  Elisabeth A. Shumaker
                                                                      Clerk of Court
 UNITED STATES OF AMERICA,

          Plaintiff - Appellee,
                                                          No. 15-4022
 v.                                             (D.C. No. 2:13-CR-00045-TC-2)
 CAROL JEAN SING,                                          (D. Utah)

          Defendant - Appellant.

 UNITED STATES OF AMERICA,

          Plaintiff - Appellee,
                                                          No. 15-4084
 v.
                                                (D.C. No. 2:13-CR-00045-TC-1)
 GERRIT TIMMERMAN, III,                                    (D. Utah)

          Defendant - Appellant.

                              ORDER AND JUDGMENT *

Before KELLY, GORSUCH, and PHILLIPS, Circuit Judges.

      Carol Sing and Gerrit Timmerman sold tax shelters. Using “corporations

sole,” they said, their clients could effectively shield their assets from IRS

collection efforts. That, of course, turned out to be anything but the case. The

      *
         This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
corporation sole is among the oldest and least employed corporate forms, one that

allows the passage of property from one officeholder to his successor, a type of

incorporation that appears to have originated in England (and continues to be used

primarily today) as a means for religious societies to pass property from, say, one

bishop to the next. W. Cole Durham & Robert Smith, 1 Religious Organizations

and the Law § 3:52, Westlaw (database updated Dec. 2013). It does not operate

to protect the assets of ordinary taxpayers from outstanding debts owed to the

IRS. Indeed, about this much there is no longer any dispute in this case, for Ms.

Sing and Mr. Timmerman do not challenge their convictions to defraud the United

States under 18 U.S.C. § 371.

      They do, however, contest their sentences. To determine their applicable

advisory guidelines ranges, the district court had to calculate the “tax loss” they

caused. The guidelines define tax loss as “the total amount of loss that was the

object of the offense (i.e., the loss that would have resulted had the offense been

successfully completed).” U.S. Sentencing Guidelines Manual (U.S.S.G.)

§ 2T1.1(c)(1) (U.S. Sentencing Comm’n 2014). Using a spreadsheet provided by

the government that summed up the debts owed to the IRS by several of the

defendants’ clients at the time they created their corporations sole, the district

court estimated the tax loss in this case was in excess of $2.5 million. Combining

that amount with various sentencing enhancements, the district court calculated an

                                          2
advisory guidelines range of 97 to 121 months in prison before selecting a

sentence of 36 months for Ms. Sing and 48 months for Mr. Timmerman.

      Ms. Sing and Mr. Timmerman argue that the district court’s tax loss

estimate is fatally flawed and that this error infected the whole of the sentencing

process. It’s not entirely clear from the text of § 2T1.1(c)(1) what mens rea the

government must prove with respect to a tax loss. Rather than employing the

standard and rigorous mens rea categories discussed in the Model Penal Code or

much of contemporary criminal law, the guidelines say the government must show

the loss amount was the “object of the [defendants’] offense (i.e., the loss that

would have resulted had the offense been successfully completed).” And you

might well wonder whether, translated into the more helpful heuristics of the

Model Penal Code, this means the government must show the defendant intended,

knew of, or perhaps was recklessly indifferent to or negligent about the amount of

loss the government would have suffered “had the offense been successfully

completed.” But, as the defendants concede, they, the government, and the

district court in this case have all proceeded on the assumption that to qualify as

the “object of the offense” the loss in question must have been intended. See

United States v. Manatau, 647 F.3d 1048, 1048 (10th Cir. 2011). And that much,

they say, the government failed to prove in this case.

      We disagree. A district court does not have to calculate a tax loss with

certainty; a reasonable estimate will do. See U.S.S.G. § 2T1.1 cmt. n.1; United

                                          3
States v. Spencer, 178 F.3d 1365, 1368 (10th Cir. 1999). This court, too, will

reverse a district court’s factual findings in support of its tax loss calculation only

on a showing of clear error. See United States v. Hoskins, 654 F.3d 1086, 1092

(10th Cir. 2011). And it seems to us that, under these standards, the district

court’s judgment easily passes muster. The spreadsheet on which the court relied

at sentencing tallied up amounts several of the defendants’ clients owed the IRS

at the time they established their corporations sole. It is beyond reasonable

dispute, as well, that at least some of these amounts were known to Mr.

Timmerman because documents in his own files showed that his clients’ debts

added up to approximately $2.559 million. 1 The district court had ample

evidence, too, to infer that Ms. Sing knew about the information contained in Mr.

Timmerman’s files. Ms. Sing and Mr. Timmerman were business partners who

worked together over several years to sell corporations sole to scores of clients

and their business model was simple: Ms. Sing would set up corporations sole for

her own clients and serve as the resident agent for those created by Mr.

      1
          Documents in Mr. Timmerman’s files showed that Mr. Beal owed
$355,369.83. See Gov’t Supp. R. at 1, 93, 97, 100. Mr. Felt owed $140,299.23.
See id. at 11, 53. Mr. Hoffman owed $925,564.01. See id. at 23. Mr. Leavitt
owed $1,138,577.18. See id. at 37, 40, 43, 104, 109, 114, 119. These amounts
include penalties and interest. The government included penalties and interest in
its tax loss calculations and we do the same while reserving the question of its
propriety consistent with § 2T1.1, for any question that might be raised about it
was not sufficiently briefed here to permit meaningful review. See generally
United States v. Black, 815 F.3d 1048, 1055 (7th Cir. 2016).

                                           4
Timmerman, while Mr. Timmerman would refer clients to Ms. Sing. Finally,

there is plenty of evidence that the defendants knew their clients would attempt to

use their corporations sole to evade the debts they owed to the IRS — indeed,

several witnesses testified that they sought the defendants’ services with precisely

that intention in mind. Given this aggregation of facts, we believe a factfinder

could reasonably infer that the defendants intended, had their scheme succeeded,

to shield their clients from collection of the amounts they owed the IRS at the

time they engaged the defendants’ services. Neither does anyone before us

dispute that the court could lawfully make such a factual finding at sentencing

under United States v. Booker, 543 U.S. 220 (2005).

      The judgment is affirmed. The government’s motion to supplement the

record on appeal is granted.

                                      ENTERED FOR THE COURT

                                      Neil M. Gorsuch
                                      Circuit Judge

                                         5
No. 15-4022, United States v. Carol Jean Sing.

No. 15-4084, United States v. Gerrit Timmerman, III.

KELLY, Circuit Judge, concurring.

         I agree with the court’s order and judgment but would reject on the merits

Ms. Sing’s argument, see Aplt. Br. (15-4022) at 24–25, 25 n.17; Aplee.

Consolidated Br. 22–29, that interest and penalties should be excluded from the

tax loss calculation. See United States v. Black, 815 F.3d 1048, 1055 (7th Cir.

2016).