Gifting Table Sentences A Disgrace


I’ve long thought the most significant criminal justice reform imaginable would be simple to impose: Require all lawmakers and judges to spend some significant period of time, let’s say six months, behind bars as an inmate. Make them taste the product they are dishing out.

After watching the federal sentencing of a client of mine, Donna Bello, I think our Solons should be required to spend not just six months, but a full year, behind bars. A year, they might learn, is a long, long time.

Bello was just sentenced to six years in prison by a federal judge. She was involved in gifting tables in the shoreline area. Her co-defendant, Jill Platt, was sentenced to four and one-half years. Both Ms. Bello and Ms. Platt were convicted by a jury.

Six years for a grandmother and hairdresser. The sentence imposed reflected a staggering, almost other-worldly, sense of unfairness. I’ve yet to see a predatory lender sent to jail for scamming people.

The federal government prosecuted the women, together with a third defendant, B.J. Hopkins, as though they were the heads of a massive criminal syndicate. Ms. Hopkins, who pleaded guilty, faces a sentence far less than Bello’s and Platt’s; she got a discount for waiving her right to trial.

The government granted immunity to those from whom it needed testimony. It relied on secret recordings. Reluctant women were summoned to grand juries, and, in some cases, threatened with prosecution. All this because the women obstructed the Internal Revenue Service’s efforts to determine just how much taxable income participants in the gifting tables received. Just in case you did not know it, that is federal crime.

Women were invited to contribute $5,000 to participate in a table. Upon payment, they entered a rank of seven other women. Eventually, each entrant was expected to make it to the top of a table, ascending through the initial rank of eights, then four, then two, arriving at the top, at which point they would receive entry gifts from new women. In theory, a full table netted $40,000 in contributions to the top woman, a gain of $35,000.

The tables were far more than a means of exchanging money. One witness after another testified at trial that they enjoyed their time on the tables; some said they would continue to participate if they would not get in trouble. You could see how nervous the witnesses were offering such testimony as IRS agents sat in the courtroom taking notes about who was naughty and who was nice.

No taxes were paid on the money exchanged on the tables. Participants were encouraged to make and receive funds in cash, and to avoid banks. In other words, monies changed hands without passing through the paws of the federal government.

When the government bleeds, it bleeds green. You mess with its bloodstream at your peril. I wonder how many certified public accountants are guilty of similar misconduct for counseling aggressive tax avoidance strategies. 

The table participants were also charged with wire fraud. They were accused of telling new participants it was all legal, and that lawyers and accountants had told them so. Fraud is not normally a federal offense, but because the defendants used the Internet to send messages, their fraud became a federal offense — the internet service provider they used had no server in Connecticut, and hence the communications crossed state lines. Federal jurisdiction extends, you see, to interstate commerce.

But here is the odd thing about the case. Each and every participant in the tables faced potential criminal prosecution as co-conspirators. The law of conspiracy is expansive: When two or more people agree to commit a crime, and any one of them makes an overt act to accomplish the objective of the conspiracy, all are equally guilty. As often happens, all of the co-conspirators need not even know one another.

At trial, dozens of witnesses were called. When the government wanted testimony from someone worried about prosecution, they would grant immunity from prosecution. When our witnesses worried about prosecution, the government refused to grant immunity, and the trial judge permitted the witnesses to avoid testifying by evoking their Fifth Amendment right against self-incrimination. The hinges to the door of justice permitted the door to swing only in the government’s favor.

Under the arcane laws governing federal criminal sentencing, complex guidelines resulted in a potential sentence of 11 to 14 years in prison for each defendant. Fellow defense lawyers were in shock upon hearing those numbers. The guidelines were supposed to limit judicial discretion in sentencing. Instead of discretion, federal judges are now required to engage in a bizarre algebra of despair.

Each federal offense has a base level. In fraud cases, that is number is six or seven, depending on the offense. Then points are added depending on how much money is at stake. More points are added based on the number of victims. Enhancements might apply if you earn more than $10,000 from criminal conduct but fail to report the illegal gain to the tax man. The guidelines manual is a ridiculous cookbook. The total points yield discrete terms of imprisonment. It is madness.

The court held a hearing and heard evidence about what the proper guidelines should be. The result was a recalculation, resulting in a sentence of eight to 10 years for Ms. Bello. Those numbers were still stratospheric, especially for a defendant with no criminal history.

As crazy as it sounds, the Supreme Court recently held that the sentencing guidelines are no longer mandatory. Even so, judges are required to do a guidelines calculation and consider the recommended sentence before imposing sentence.

The judge sentenced Ms. Bello to six years, a non-guidelines sentence that was, in some twisted sense, supposed to reflect leniency.

I watched the imposition of sentence as though I were in an airless room. Six years in prison. The crime? Impeding the IRS’s ability to determine taxable income; misinforming others about IRS gift tax exemptions.

Give me a break. Predatory lenders crash the economy, and we bail out bankers. But we call justice sending grandmothers to jail for long sentences in which only willing participants were hurt, if they were hurt at all. The “victims” were characters straight out of P.T. Barnum; only a handful surfaced at the sentencing hearing, hands out, asking for their money back. 

Clarence Darrow once said that there is no justice, in or out of court. He was right, of course. The sentences in the gifting table case are a mockery of justice.

 

Also listed under: Journal Register Columns

Comments: (1)

  • Madoff, just smaller
    A lawyer who has never heard of a Ponzi scheme; now I've seen everything! A friend and tax client of mine lost 5 grand in one of these things -- 5 grand she didn't have! That's a lot of houses she has to clean. Maybe the defendants in this case should have to do that for a few years.
    Posted on July 3, 2014 at 5:39 am by Urbie Watrous

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