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United States v. Leonard

May 09, 2002

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
LISA LEONARD, DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Eastern District of Wisconsin. No. 01-CR-19--Rudolph T. Randa, Judge.

Before Bauer, Ripple and Manion, Circuit Judges.

The opinion of the court was delivered by: Bauer, Circuit Judge

Argued February 20, 2002

Lisa Leonard was charged with eleven counts of tax fraud. She entered a guilty plea to Count Eleven and the district court granted the government's motion to dismiss Counts One through Ten without prejudice. At Leonard's sentencing hearing, the district court sentenced Leonard to 30 months in prison. This sentence was based, in part, on "relevant conduct," which was initially charged in the dismissed counts of Leonard's indictment. Leonard appeals her sentence. We affirm the sentence imposed by the district court.

BACKGROUND

In April of 1998, Lisa Leonard filed a 1997 federal income tax return with the United States Treasury Department and claimed wages of $11,657, purportedly earned from a company named MOFOCO Enterprises. A fraudulent W-2 Form supposedly issued by MOFOCO showing earned wages and withholding was attached to Leonard's tax form. Based on these claimed wages, Leonard sought a tax refund in the amount of $4,461. Leonard was never employed at MOFOCO Enterprises. A representative from the company confirmed that no wages were ever paid to Leonard and no withholding occurred.

In all, over the course of three years, Leonard prepared a total of eleven false income tax returns. In addition to submitting her own fraudulent claim for a tax refund for 1997, Leonard assisted five others in preparing and submitting false federal income tax returns to obtain refunds to which they were not entitled for the years 1995, 1996 and 1997. These five individuals testified that Leonard approached each of them, offered to complete their returns and in formed them that they were entitled to a refund for various reasons, all of which she fabricated. Two of these individuals were Leonard's neighbors and the three others were relatives of Leonard's boyfriend. Leonard met with each individual and obtained their respective social security numbers, dependant information and, if available, a W-2 Form. For each of these returns, Leonard prepared and included an altered or completely fabricated W-2 Form. In some cases, Leonard altered a legitimate W-2 Form to show additional wages and withholding; in other cases, Leonard cre ated an entirely false W-2 Form for employment that never occurred. All of these fraudulent tax returns falsely claimed an earned income credit and a refund of fictitious tax income withheld.

At Leonard's direction, the five individuals took their completed federal income tax returns to H&R Block for filing. Leonard charged each individual a fee ranging from $50 to $1,000 for her work in preparing their returns. Payment was usually made at the time the refund check was cashed, although in some instances, Leonard required a "down payment" prior to the preparation of the return.

On February 6, 2001, a federal grand jury returned an eleven count indictment against Leonard. Counts One through Ten charged her with devising and executing a scheme to assist others in obtaining false refunds from the I.R.S. by filing false federal income tax returns in violation of 18 U.S.C. sec.sec. 287, 2. Count Eleven charged her with making a false tax claim to the I.R.S. for a refund on her own behalf. On May 21, 2001, Leonard entered a guilty plea to Count Eleven and the district court granted the government's motion to dismiss the remaining ten counts.

The district court conducted a sentencing hearing in September of 2001. The government offered various exhibits and the testimony of witnesses to establish that Leonard's fraudulent filing of tax returns on behalf of others was "relevant conduct" for purposes of sentencing. Each of the five individuals for whom Leonard prepared returns testified at the hearing. Each confirmed that Leonard prepared his or her tax return and that they relied upon her expertise in seeking their refund. All five testified that they had actually observed Leonard prepare either their own tax returns or the tax returns of others in her apartment. Some also stated that Leonard's apartment contained papers, an adding machine, a typewriter, white-out and a notebook containing social security numbers and phone numbers.

The district court adopted the facts and sentencing calculation set forth in the Presentence Report (PSR). The court found that the government established by a preponderance of the evidence that Leonard's fraudulent filing of tax returns on behalf of others constituted "relevant conduct" to the offense in Count Eleven for sentencing purposes. Leonard's offense level was adjusted accordingly, and she was sentenced to 30 months imprisonment. This appeal followed.

DISCUSSION

A. "Relevant Conduct" Adjustment

Leonard first argues that the district court erred when it considered the tax frauds Leonard committed on behalf of others as "relevant conduct" under section 1B1.3(a) of the Sentencing Guidelines. This conduct was initially charged in the indictment, but dismissed pursuant to the government's motion. At Leonard's sentencing hearing, the district court determined that she caused a total financial loss of $46,497. This figure was based on the loss of $4,461, which resulted from the fraud to which Leonard pled guilty, plus an additional loss of $42,036, resulting from the false income tax returns filed on behalf of the five other individuals for 1995, 1996 and 1997. Leonard argues that the district court's calculation is flawed: that the $42,036 should not have been included in the total loss she caused because it does not constitute ...


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