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United States v. Friend

January 10, 1997






Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 95 CR 383-2 Suzanne B. Conlon, Judge.

Before CUMMINGS, EASTERBROOK and ROVNER, Circuit Judges.

CUMMINGS, Circuit Judge.



On November 30, 1995, defendant Charles Friend pled guilty to impeding and obstructing the administration of the Internal Revenue Code in violation of 25 U.S.C. sec. 7212(a). In the district court the government sought sentencing enhancements for the defendant's use of sophisticated means to impede the discovery or existence of the offense under U.S. Sentencing Guideline sec. 2T1.4(b)(2) and for defendant's obstructive conduct under U.S. Sentencing Guideline sec. 3C1.1. On February 27, 1996, the district court sentenced the defendant to a 14-month prison term, imposing a two-level sentencing enhancement for use of sophisticated means and a twolevel enhancement for obstruction of justice, in each case over defendant's objection.

Defendant challenges the district court's imposition of these enhancements. We affirm.


Friend was an accountant who prepared tax returns and served as a tax preparer for a fee. Between January 1991 and September 1994, the defendant prepared and filed or caused to be filed in the names of various individuals a number of false and fraudulent tax returns, which claimed refunds to which the taxpayers were not entitled. The defendant did not sign his name as a paid tax preparer on most of these returns in order to conceal from the IRS his identity and his fraudulent actions. For his services, the defendant charged a fee equal to a portion of the fraudulent refund claimed.

From time to time the defendant would seek out his friend and co-schemer Delbert Pryor to request Pryor to access IRS computer records in order to determine the status of fraudulent claims for refunds the defendant had prepared for the benefit of himself and his clients and to expedite those refunds. From 1986 through most of 1994, Pryor was employed by the IRS as a problem resolution officer, and in that capacity Pryor had access to taxpayer returns, which he was prohibited by law from disclosing.

The defendant's scheme began to unravel when an undercover IRS agent sought his help in preparing tax returns for the tax years 1991-1993. After initially preparing correct returns, the defendant proposed to the IRS agent that he prepare returns based on false information to increase her refund substantially. The IRS agent agreed, and the defendant prepared and caused to be filed fraudulent tax returns. The defendant asked for Pryor's assistance in expediting the refunds, and Pryor, among other things, illegally accessed the IRS agent's tax accounts on the IRS computers. Pryor was paid a portion of the defendant's fees on the transactions.

In April 1993, one of Friend's clients ("Client B") was approached by the IRS regarding her 1992 tax return, which had been prepared and filed, but not signed, by the defendant. When the defendant learned that the IRS had contacted Client B, he advised her not to disclose his name to the IRS as the paid preparer of her false return. Later that month, after several other clients of the defendant had been approached by the IRS in connection with their returns, he contacted Pryor and arranged a meeting with several clients to discuss their responses to the IRS inquiries. At the meeting, the defendant introduced Pryor as an IRS employee, and Pryor advised the clients to tell the IRS that each of them had prepared his or her own return. Immediately after that meeting, Pryor and the defendant drove to Client B's home, where Pryor introduced himself as an IRS employee and advised her not to disclose the defendant's name as the person who had prepared her tax return.

In November 1993, the defendant asked Pryor to obtain confidential information improperly from IRS computer files on a former Chicago Bears football player. The information was sought on behalf of the ex-wife of the player, who was then involved in a divorce-related proceeding. Pryor provided the defendant with the current address and yearly income of the taxpayer, and the defendant turned it over to a friend of the ex-wife.

After these events and after learning that he was under investigation, the defendant began to co-operate with the government, providing information on numerous occasions that ultimately led to the indictment and conviction of Pryor. As part of the defendant's plea agreement, the government agreed to make known to the district court the extent of his co-operation and to move for a ...

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