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United States v. Jones

April 17, 1995




Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 93 CR 73--James F. Holderman, Judge.

Before RIPPLE and ROVNER, Circuit Judges, and MILLER, District Judge. *fn*

ROVNER, Circuit Judge



Aliza Jones pled guilty to count I of a nine-count superseding indictment that charged her and co-defendant Anthony D. Scott with executing a tax fraud scheme in violation of 26 U.S.C. sec. 7212(a) & 18 U.S.C. sec. 2. In imposing a prison sentence of 20 months, the district court refused to grant Jones a two-point reduction to her base offense level for acceptance of responsibility under section 3E1.1(a) of the Sentencing Guidelines. Jones contends in this appeal that the district court's finding is clearly erroneous, but we disagree and thus affirm her sentence.


The superseding indictment charged Jones and Scott with managing a tax fraud scheme that involved the filing of false and fraudulent tax returns through the Internal Revenue Service's (IRS's) Electronic Filing Program ("EFP"). *fn1 The indictment charged that Jones and Scott, after collecting information from individuals we will call "runners," prepared W-2 forms, tax returns, and other documents in a runner's name. Utilizing false employment, income, and withholding information, these documents claimed that the runner was entitled to a tax refund. Jones and Scott then instructed the runner to utilize a tax filing service to submit the fictitious information to the IRS under the EFP.

Tax filing services participating in the EFP offer their clients the option of applying for a Refund Anticipation Loan ("RAL") from a designated financial institution. The RAL program enables a taxpayer to obtain a short-term loan in the amount of the anticipated refund within three to five days of transmission of a return. On the basis of the refunds claimed in their fictitious returns, Jones, Scott, and the runners applied for RALs. Once the designated bank approved their applications and disbursed the loan proceeds, Jones and/or Scott would accompany the runner to the tax filing service to pick up the loan check, and thereafter to a currency exchange to cash the check. Jones and Scott would then split the loan proceeds with the runner.

Jones entered into a plea agreement with the government in which she admitted devising and conducting this scheme between approximately March 1992 and February 1993. Jones also admitted, as charged in count I of the superseding indictment, that at least ten fraudulent tax returns were filed electronically during the relevant time period as part of this scheme. Two of the returns were submitted in Jones' own name for the 1990 and 1991 tax years, a 1991 return was submitted in Scott's name, and the remaining seven returns were for the 1991 tax year and were submitted in the names of seven runners, including Jones' son. Jones agreed in the plea agreement that the refunds claimed in these ten returns totaled approximately $25,854.00, and that the payouts on these claims by either the IRS or banks in the form of RALs totaled $20,754.00.

The plea agreement also included preliminary offense level calculations under the Sentencing Guidelines. With respect to a two-point reduction for acceptance of responsibility, the government agreed as follows in para. 6(d):

The defendant has clearly demonstrated a recognition and affirmative acceptance of personal responsibility for her criminal conduct. If the government does not receive additional evidence in conflict with this provision, and if the defendant continues to accept responsibility for her actions within the meaning of Guideline sec. 3E1.1, a two-level reduction in the offense level is appropriate.

Jones entered her plea of guilty pursuant to the plea agreement at a hearing before the district court on October 4, 1993. In the course of that hearing and while Jones was under oath, the district court asked whether she disagreed with any part of the government's explanation of the evidence it would have offered at her trial. Jones indicated that she "had nothing to do with" the false tax materials submitted by two of the individuals listed in the superseding indictment and in the plea agreement. (Oct. 4, 1993 Tr. at 26.) The court then asked whether individuals other than those named in the indictment and plea agreement had filed false returns pursuant to the scheme, and Jones indicated that there had been others. (Id.) The court explained that in connection with her pledge of cooperation in the plea agreement, it expected Jones to fully cooperate with the government in naming these other individuals. (Id.) The court indicated that it would take the extent of Jones' cooperation into account at her sentencing. (Id.)

The United States Probation Office prepared a presentence report ("PSR") prior to Jones' sentencing. The probation officer recommended that Jones be denied the twolevel adjustment for acceptance of responsibility, reporting that in her meetings with the officer, Jones had acknowledged only a portion of the conduct to which she had pled guilty. The probation officer explained that in the course of their discussions, Jones had accepted responsibility for only two of the ten fraudulent tax returns, and the officer further noted that Jones had not abided the court's admonition to cooperate further by naming other runners. Indeed, the PSR stated that three separate appointments had been scheduled between Jones and the Assistant United States Attorney for this purpose but that Jones had failed to appear for each appointment.

The district court held a sentencing hearing on January 24, 1994, at which two issues were disputed--whether Jones had been a manager or supervisor under Guidelines section 3B1.1(b) *fn2 and whether she had demonstrated an acceptance of responsibility under section 3E1.1(a). Prior to the district court's ruling on these issues, Jones articulated her disagreement with the probation officer's view that she was a manager or supervisor. Although she acknowledged her participation in the scheme, Jones maintained that she was not as culpable as her co-defendant Scott and that she "didn't manage or supervise anyone." (Jan. 24, 1994 Tr. at 9.) She admitted that she had induced other individuals to become involved in the tax fraud scheme but denied that she had ever advised anyone on how to prepare or to file a fraudulent return. (Id.) Based upon evidence proffered by the government, however, which was ...

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