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United States v. Black

United States District Court, Seventh Circuit

November 27, 2013

UNITED STATES OF AMERICA,
v.
REX BLACK, Defendant.

OPINION AND ORDER RESOLVING CERTAIN ISSUES RELATING TO DEFENDANT'S SENTENCING GUIDELINES RANGE

JAMES F. HOLDERMAN, District Judge.

Defendant Rex Eugene Black ("Black") stands convicted of five federal felonies arising from his fraudulent criminal conduct in this case. He faces a maximum term of imprisonment of one hundred and three years. Black was once a resident and landowner in Will County, Illinois. He held titles to a farm located at 32500 South Center Line Road ("Farm") near Manteno and a home located at 2852 West Eagle Lake Road in Beecher ("Beecher Home"). He also owned other property that was held in trust for him and his wife in what was called Eagle Nest Limited Trust.

Unlike most Americans, Black did not pay his taxes. His recalcitrance about paying his taxes intensified in 2001 when the IRS assessed Black and his wife $3.89 million in taxes, penalties and interest for the years 1997 and 1998. Following that assessment, Black still did not pay. When the government placed liens on his property, Black's recalcitrance escalated from his crime of willful failure to pay his taxes to much more serious and egregious criminal conduct. That more serious criminal conduct is the conduct of which Black stands convicted in this case, Black's knowingly and corruptly submitting false, fraudulent, and fictitious financial documents to the IRS on multiple occasions during 2002 and 2003 to obstruct and impede the IRS in its lawful collection of the taxes, penalties and interest.

I. Background Facts

When Black was indicted (Dkt. No. 1) ("Indictment") in March 2006, he had already left the country. He then lived beyond the reach of the United States government in Mexico for several years. In 2012, he was apprehended in Texas and was returned to this district to face the charges in the Indictment. He was convicted on May 9, 2013 by a jury of all counts in the Indictment. (Dkt. No. 129, (Final Verdict Form, under seal to protect jurors' signatures); Dkt. No. 176-1, (public copy of Final Verdict Form, with jurors signatures redacted.))

The scenario leading to Black's conviction of the crimes in the Indictment began in 2000 when the IRS conducted an audit of Black's income and wealth for the years 1997 and 1998.[1] The IRS, as a result of that audit, determined that Black and his wife owed the federal government approximately $3, 890, 000 in income taxes, penalties and interest. Black did not cooperate with the IRS during that audit nor did Black pay the money he owed the government. The debt that Black owes the government has continued to grow over time with the addition of interest and penalties resulting from Black's criminal conduct of which Black was convicted - submitting fraudulent, false and fictitious financial documents to obstruct and impede the IRS.

Back in October 2002, due to Black's continuing non-payment of his debt to the government, the IRS began filing liens on Black's property with the Will County, Illinois Recorder of Deeds to assist in the government's collection of the money Black owed. In response, Black engaged in his series of serious fraudulent felony criminal acts. Over a period of ten months, Black submitted on multiple occasions fraudulent, false and fictitious financial documents to the IRS to impede and obstruct its lawful collection efforts. Each time Black submitted one of his several fraudulent documents, his criminal object and intent was to deceive and defraud the government the face amount of that phony document which Black fraudulently purported was payment of money Black owed the government. The trial jury unanimously found Black guilty because the evidence established beyond a reasonable doubt that Black knowingly and corruptly obstructed and impeded the IRS (Dkt. No. 129; 176-1). Black committed these crimes not only to further his intentional evasion of the taxes Black owed, but also to thwart the government's collection of the penalties and interest obligations Black owed to the government.

Each of Black's multiple phony payment documents was admitted in evidence at the trial of the case. Black's purported payments using his fraudulent, false and fictitious documents collectively totaled more than $14, 000, 000.

II. Facts Supporting Black's Conviction of Multiple Criminal Acts

Black's multiple criminal acts of which the jury found him guilty beyond a reasonable doubt were charged in the Indictment as a violation of 26 U.S.C. 7212(a) in Count One, which carries a maximum prison term of three years, and violations of 18 U.S.C. 514(a) in Counts Two through Four, each of which carries a maximum prison term of twenty-five years. Black's guilt was established by the following facts:

On October 4, 2002, the IRS filed a lien in the amount of $4, 856, 895.49 against Black's property and property rights. On October 22, 2002, Black responded to this lien with criminal conduct, as the jury unanimously found, in that Black knowingly and corruptly obstructed the due administration of the internal revenue laws and the IRS's lawful function to collect income taxes, penalties, interest and fines, when he submitted to the IRS a fraudulent and false document in the form of a check, number 1535, drawn on a closed account at Harris Bank in the amount of the lien - $4, 856, 895.49 (G. Ex. 18A).

On October 29, 2002, the IRS notified Black that he had a further outstanding debt to the government of an additional $505, 993.68 in penalties and interest. Black responded again with criminal conduct in that he knowingly and corruptly obstructed the due administration of the IRS's lawful collection functions, when Black, on November 8, 2002, submitted to the IRS another fraudulent and false document, check number 1537, drawn on that same closed Harris Bank account in the amount the IRS sought from Black - $505, 993.68 (G. Ex. 20A).

On November 7, 2002, the IRS filed two liens on Black's property, the first in the amount of $1, 467, 168.33 on Black's Beecher Home and the second in the amount of $1, 417, 804.18 on Black's ownership interest in the Eagle Nest Limited Trust. Black responded to both liens by knowingly and corruptly obstructing the IRS's lawful collection of taxes, penalties and interest, in that Black submitted to the IRS two false and fraudulent documents in the form of checks, both drawn on a closed account at Fleet Bank, both dated April 22, 2003, and both payable to the Department of Treasury in purported payment of the respective liens on Black's Beecher Home and Black's Eagle Nest Limited Trust: check number 111 in the amount of $1, 467, 168.33 (G. Ex. 24) and check number 112 in the amount of $1, 417, 804.18 (G. Ex. 25A).

On July 10, 2003, Black again knowingly and corruptly further obstructed the IRS's lawful monetary collection efforts by submitting to the IRS a fictitious financial document dated July 10, 2003, Registered Bill of Exchange number 4406, payable to the IRS and falsely purporting to pay again the amount of the lien on Black's Beecher Home - $1, 467, 168.33 (G. Ex. 26A).

On July 29, 2003, the IRS filed another lien on Black's Farm, this time in the amount of $4, 954, 049.40. Black's response again was to knowingly and corruptly obstruct the IRS's collection efforts when Black submitted to the IRS in a purported full payment to extinguish that lien, a fictitious financial document dated August 14, 2003, Registered Bill of Exchange number 4437, payable to the United States Treasury in the amount of $4, 954, 049.40 (G. Ex. 29A).

While Black was engaged in the above-described crimes to knowingly and corruptly obstruct and impede the IRS, Black, on July 13, 2003, with the intent to defraud the Clerk of the Court of the Northern District of Illinois, submitted a false and fictitious financial document in the form of a Registered Bill of Exchange, number 4428 to pay a ...


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