T.C. Memo. 2009-81
UNITED STATES TAX COURT
JOSEPH B. WILLIAMS, III, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2202-08. Filed April 16, 2009.
P filed tax returns for 1993 through 2000. He was
later charged with tax evasion under I.R.C. sec. 7201
for all 8 years. By agreement P pleaded guilty to one
count of tax evasion in a superseding criminal
information as to all 8 years. By a notice of
deficiency issued in October 2007, R determined
deficiencies and fraud penalties for all 8 years. P
filed a petition in this Court in which he asserted
that he merely pleaded guilty to tax evasion in some
indeterminate year or years during the span of 1993
through 2000, not for all 8 years nor for any given
year therein. R moved for partial summary judgment on
the issue of P’s fraud for all 8 years.
Held: The superseding criminal information, P’s
allocution and plea, and the conviction all explicitly
assert tax evasion in all 8 years.
Held, further, P’s conviction for tax evasion
under I.R.C. sec. 7201 for 1993 through 2000
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collaterally estops him for each of those years from
denying civil fraud for purposes of the statute of
limitations, see I.R.C. sec. 6501(c)(1), and the fraud
penalty, see I.R.C. sec. 6663(a).
David H. Dickieson, for petitioner.
John C. McDougal, for respondent.
MEMORANDUM OPINION
GUSTAFSON, Judge: Petitioner Joseph Bryan Williams, III,
was charged with tax crimes for each of the 8 years 1993 through
2000. He pleaded guilty and was convicted for all 8 years.
Subsequently, the Internal Revenue Service (IRS) issued to
Mr. Williams a statutory notice of deficiency pursuant to
section 6212,1 showing the IRS’s determination of deficiencies in
income tax and accompanying fraud and accuracy-related penalties
under sections 6663 and 6662, respectively, for all 8 of those
years.
Mr. Williams petitioned this Court, pursuant to
section 6213(a), to redetermine those deficiencies. We
previously decided several threshold jurisdictional issues, see
Williams v. Commissioner, 131 T.C. __ (2008), and the case is
1
Unless otherwise indicated, all citations to sections refer
to the Internal Revenue Code of 1986 (26 U.S.C.), as amended, and
all citations to Rules refer to the Tax Court Rules of Practice
and Procedure.
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now before us on respondent’s motion for partial summary judgment
pursuant to Rule 121. The issue for decision is whether
respondent is entitled to partial summary judgment2 because
Mr. Williams’s guilty plea to criminal tax evasion under section
7201 with respect to tax years 1993 through 2000 collaterally
estops him from contesting that he fraudulently underpaid his
income taxes for all 8 of the tax years at issue. Mr. Williams
acknowledges that he is liable for civil tax fraud on the basis
of his criminal conviction, but he opposes the motion by arguing
that the conviction does not make him liable in every one of the
8 years, but in only some of them (yet to be decided). However,
the criminal charge, Mr. Williams’s allocution and plea, and the
conviction all explicitly assert tax evasion in all 8 years, and
respondent’s motion will be granted.
Background
The following facts are not in dispute and are derived from
the pleadings, the parties’ motion papers, and the supporting
exhibits attached thereto.
Mr. Williams’s Business Activity
During the years at issue, Mr. Williams was an oil trader
for Mobil Oil, who traveled to foreign countries. In 1993
2
Respondent seeks summary judgment for all 8 of the tax
years at issue, but only as to the issue of whether Mr. Williams
fraudulently underpaid his income taxes, not as to the actual
amounts of tax deficiency and penalties.
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Mr. Williams opened two bank accounts at Banque Indosuez in
Switzerland in the name of ALQI Holdings, Ltd. (ALQI), a British
Virgin Islands corporation (the ALQI accounts). From 1993
through 2000, more than $7 million was deposited in the ALQI
accounts, and more than $800,000 in interest was earned on those
deposits.
Respondent alleges that these deposits and the interest
thereon were current income to Mr. Williams in the tax years
received or earned. Mr. Williams disagrees and alleges that
these amounts were not taxable to him until ALQI distributed them
to him.
The Examination and Criminal Information
For each of the 8 tax years 1993 through 2000, Mr. Williams
filed a Form 1040, U.S. Individual Income Tax Return, that did
not reflect the deposits to or interest on the ALQI accounts. He
filed the return for each year in the succeeding year, and he
filed the latest of them (for 2000) in May 2001.3
The IRS conducted an investigation of Mr. Williams and ALQI,
which culminated in Mr. Williams’s being charged in April 2003.
The superseding criminal information (to which Mr. Williams later
pleaded guilty) stated two counts: (1) one count of conspiracy
3
Mr. Williams filed his return for 1993 on April 15, 1994;
for 1994 on April 17, 1995; for 1995 on April 15, 1996; for 1996
on April 15, 1997; for 1997 on April 15, 1998; for 1998 on April
15, 1999; for 1999 on April 17, 2000; and for 2000 on May 15,
2001.
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to defraud the IRS, in violation of 18 U.S.C. section 371 (the
conspiracy count), and (2) one count of criminal tax evasion with
respect to each of the 8 tax years 1993 through 2000, in
violation of section 7201 of the Internal Revenue Code (the tax
evasion count).4 The tax evasion count alleged tax evasion in
all 8 years, as follows:
COUNT TWO
(Tax Evasion)
* * * * * * *
(17) From in or about 1993, through in or about
April 2001, in the Southern District of New York and
elsewhere, J. BRYAN WILLIAMS, the defendant,
unlawfully, willfully and knowingly did attempt to
evade and defeat a substantial part of the income tax
due and owing by J. BRYAN WILLIAMS and his spouse to
the United States of America for the calendar years
1993 through 2000, by various means, including, among
others by (a) arranging for approximately $7.98 million
in payments which were income to Williams to be made
into the secret Alqi accounts in Switzerland he
controlled; and (b) preparing and causing to be
prepared, signing and causing to be signed, and filing
and causing to be filed, false and fraudulent U.S.
4
While Mr. Williams seems to use the terms “criminal
information” and “indictment” interchangeably, both at his plea
hearing and in his pleadings and motion papers herein, the
procedure employed in Mr. Williams’s case was a criminal
information. An indictment is “[t]he formal written accusation
of a crime, made by a grand jury and presented to a court for
prosecution against the accused person”, whereas an information
is “[a] formal criminal charge made by a prosecutor without a
grand-jury indictment.” Black’s Law Dictionary 788, 795 (8th ed.
2004). These are different procedures, see Fed. R. Crim. P. 7,
but the difference is not material either to the application of
collateral estoppel to a conviction or to the outcome of this
case, see infra pt. II.B.1.
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Individual Income Tax Returns, Form 1040, for the
calendar years 1993 through 2000, on which he failed to
disclose his interest in the secret Alqi bank accounts
in Switzerland, and on which, in the years set forth
below, he failed to report the approximate amounts of
income set forth below, and upon which income there was
a substantial additional tax due and owing to the
United States of America:
Calendar Year Approximate Amount
of Income
1993 $1,029,518.72
1994 752,479.52
1995 998,723.14
1996 3,917,762.57
1997 1,670,891.49
1998 133,371.90
1999 109,167.59
2000 256,234.64
(Title 26, United States Code, Section 7201).
[Emphasis added.]
Mr. Williams’s June 2003 Guilty Plea and Conviction
On June 12, 2003, Mr. Williams entered a plea of guilty to
one count of conspiracy to defraud the IRS in violation of
18 U.S.C. section 371 and to one count of criminal tax evasion
with respect to the 8 tax years 1993 through 2000, in violation
of section 7201.
In the course of taking the guilty plea, the District Court
judge asked Mr. Williams for a specific allocution as to what
crimes he committed. We quote here from Mr. Williams’s
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allocution, emphasizing language that acknowledged tax evasion in
all 8 years at issue:
THE DEFENDANT: In 1993, with the assistance of a
banker at Bank Indosuez, I opened two bank accounts in
the name of a corporation Alqi Holdings, Ltd. Alqi was
created at that time as a British Virgin Islands
Corporation. The purpose of that account was to hold
funds and income I received from foreign sources during
the years 1993 to 2000.
Between 1993 and 2000, more than seven million
dollars was deposited in the Alqi accounts and more
than $800,000 in income was earned on those deposits.
I knew that most of the funds deposited into the
Alqi accounts and all the interest income were taxable
income to me. However, the calendar year tax returns
for ‘93 through 2000, I chose not to report the income
to my -- to the Internal Revenue Service in order to
evade substantial taxes owed thereon, until I filed my
2001 tax return.
* * * * * * *
I knew what I was doing was wrong and unlawful.
I, therefore, believe that I am guilty of evading the
payment of taxes for the tax years 1993 through 2000.
I also believe that I acted in concert with others to
create a mechanism, the Alqi accounts, which I intended
to allow me to escape detection by the IRS. Therefore,
I am -- I believe that I’m guilty of conspiring with
the people would whom I dealt regarding the Alqi
accounts to defraud the United States of taxes which I
owed.
At the allocution hearing, the court and counsel also discussed
separately Mr. Williams’s plea to the conspiracy count, as to
which reservations were stated on his behalf:
MR. SHERTLER [Defense Counsel]: And, your
honor, may I -- we’re not adopting or accepting the
facts as stated in the conspiracy count, which I think
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is the recitation of what was in the original
indictment in this case. What we have agreed is that
Mr. Williams would plead guilty to conspiracy counts,
but based upon the factual allocution, which he has
given to this Court.
* * * * * * *
* * * [B]ut we are not adopting the facts that are
stated in that [conspiracy] count. And I think that
Mr. Neiman [the prosecutor] is correct, he could plead
guilty to the conspiracy counts based on different
facts, as long as your Honor is satisfied with the
allocution.
THE COURT: Well, that’s exactly where we are
at the moment. But I think I am -- and I, if you have
any other questions, Mr. Neiman, that you want to put
to him, in addition to those he’s recited, it’s your
turn.
MR. NEIMAN [Prosecutor]: No, your Honor. I
believe that the plea allocution that was given was
sufficient. I believe Mr. Williams acknowledged
getting two the million dollar payment, which is what’s
charged in count one [the conspiracy count], and not
reporting it.
THE COURT: And, in fact, has allocuted with
respect to the elements in count two [the tax evasion
count] as well.
MR. NEIMAN [Prosecutor]: I believe that’s correct,
you Honor.
THE COURT: Very well. I will accept the plea
and find that you are fully competent and capable of
entering an informed plea, and that your guilty plea is
a knowing and a voluntary one and supported by an
independent basis in fact containing each and every
essential element of the offense, and the Clerk will
enter the guilty plea. [Emphasis added.]
A judgment of conviction on both the conspiracy count and the tax
evasion count was entered against Mr. Williams and became final
on October 22, 2003.
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On October 29, 2007, the IRS issued to Mr. Williams a
statutory notice of deficiency pursuant to section 6212, showing
the IRS’s determination of the following deficiencies and
accompanying fraud and accuracy-related penalties under sections
6663 and 6662, respectively, for all 8 of those years:
Penalty
Year Deficiency Sec. 6663 Sec. 6662
1993 $417,652 $313,038.00 ---
1994 304,740 226,206.75 ---
1995 417,354 313,015.50 ---
1996 1,572,673 1,179,504.75 ---
1997 809,620 511,143.00 $25,619.20
1998 52,733 39,549.75 ---
1999 113,049 33,395.25 13,704.40
2000 120,391 74,093.25 4,320.00
Proceedings in This Court
Mr. Williams petitioned this Court pursuant to
section 6213(a) to redetermine those asserted deficiencies.
Respondent moved for partial summary judgment, asking the Court
to hold that Mr. Williams is liable for civil fraud in each of
the 8 years 1993 through 2000.
Mr. Williams does not dispute that he committed tax fraud
and owes Federal income taxes and interest and penalties thereon.
However, Mr. Williams argues that he merely pleaded guilty to
criminal tax evasion in some indeterminate year or years during
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the span of 1993 through 2000, not for all of the years nor for
any given year therein. Thus, Mr. Williams’s dispute is limited
to when (i.e., for what tax years) he owes Federal income taxes:
The basis for this opposition [to the IRS’s Motion for
Partial Summary Judgment] is narrow and limited.
Mr. Williams pled guilty to tax evasion in U.S. v.
Williams, Criminal No. 03 CR 406 (S.D.N.Y. 2003).
Consequently, the IRS has the authority, under 26
U.S.C. Section 6663, to impose a civil fraud penalty as
a percentage of the tax that was evaded by fraudulent
means. As indicated in the Petition and subsequent
pleadings, the principal issue in this case is not that
Mr. Williams doesn’t owe taxes or penalties, but when
the taxes and penalties were incurred. This Court must
make findings relating to the amount and year that such
taxes and penalties were incurred. Then, based on
those findings, the IRS can compute the interest owed.
The difference in the amount of interest will vary by
many millions of dollars based on this Court’s
determination of when the income is to be recognized.
[Emphasis added.]
About his guilty plea, Mr. Williams explains that he--
viewed those allegations [in the criminal information]
as factually incorrect, but he was willing to plead
guilty to Tax Evasion as described by him during his
allocution to the Court. * * * [B]oth the prosecutor
and the judge accepted Mr. Williams’ plea on the facts
that he described and not on the Superseding
Information that he rejected * * *. * * * Given this
explicit rejection of the facts alleged in the
Superseding Information by Mr. Williams and the
acceptance of that rejection by both the Court and the
Prosecutor, it is clear that the Superseding Criminal
Information cannot have a collateral estoppel impact on
subsequent litigation. The only facts capable of
establishing a collateral estoppel impact are those
facts expressly affirmed in Mr. Williams’ allocution.
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Discussion
I. Standard for Summary Judgment
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). The Court may grant full
or partial summary judgment where there is no genuine issue of
any material fact and a decision may be rendered as a matter of
law. Rule 121(b); Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520
(1992), affd. 17 F.3d 965 (7th Cir. 1994). The moving party
bears the burden of proving that no genuine issue of material
fact exists, and the Court will view any factual material and
inferences in the light most favorable to the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986);
Sundstrand Corp. v. Commissioner, supra at 520; Dahlstrom v.
Commissioner, 85 T.C. 812, 821 (1985). If there exists any
reasonable doubt as to the facts at issue, the motion must be
denied. Sundstrand Corp. v. Commissioner, supra at 520 (citing
Espinoza v. Commissioner, 78 T.C. 412, 416 (1982) (“The opposing
party is to be afforded the benefit of all reasonable doubt, and
any inference to be drawn from the underlying facts contained in
the record must be viewed in a light most favorable to the party
opposing the motion for summary judgment”)).
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The issue of whether Mr. Williams fraudulently underpaid his
Federal income taxes in 1993 through 2000 can be resolved on the
basis of the undisputed facts.
II. Mr. Williams’s Liability for Civil Tax Fraud
Respondent moves for partial summary judgment on the grounds
that Mr. Williams is collaterally estopped from contesting that
he fraudulently underpaid his Federal income taxes in 1993
through 2000 because his guilty plea for criminal tax evasion
under section 7201 as to the years 1993 through 2000 is
conclusive and binding as to those tax years.
A. To Prevail in This Case, the IRS Must Prove Fraud.
Mr. Williams’s fraud is the threshold issue in this case,
not only because his liability for the fraud penalty depends on
it, but also because fraud affects the period of limitations for
assessment of his liability for the tax deficiencies. Generally,
the IRS must assess a deficiency within 3 years of the date on
which the tax return that relates to such deficiency was filed.
Sec. 6501(a). For the tax years 1993 through 2000,
Mr. Williams’s latest-filed return (for 2000) was filed May 15,
2001. However, it was not until more than 6 years later--on
October 29, 2007--that the IRS issued to Mr. Williams a notice of
deficiency, which is the first step in the process of assessing a
deficiency. If the general rule of section 6501(a) applied, then
the IRS would have failed to assess the deficiency within the
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period of limitations and would be barred from assessing and
collecting any of the deficiencies or additions to tax for the 8
tax years at issue. However, if the deficiency was determined
“[i]n the case of a false or fraudulent return with the intent to
evade tax,” then the IRS may assess such deficiency “at any
time.” Sec. 6501(c)(1). Thus, we decide as a threshold matter
whether Mr. Williams is liable for fraud under section 6663.
Respondent bears the burden of proving the existence of
civil tax fraud. See sec. 7454(a); Rule 142(b). If respondent
fails to prove fraud, then the statute of limitations will
prevent respondent from assessing and collecting any of the
deficiencies or additions to tax. See sec. 6501(a). The
particular issue implicated in respondent’s pending motion is
whether Mr. Williams is liable for fraud for all 8 years, or
whether he is liable for fraud merely for some indeterminate time
within the span of those 8 years.
B. Collateral Estoppel Bars Relitigation of Fraud
1. Conviction for Attempting To Evade or Defeat Tax
Establishes Fraud.
Respondent asserts that Mr. Williams’s conviction on one
count of criminal tax evasion under section 7201 with respect to
tax years 1993 through 2000 collaterally estops him from
contesting that he fraudulently underpaid his income taxes in
those tax years. In Montana v. United States, 440 U.S. 147,
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153-154 (1979), the Supreme Court explained the doctrine of
collateral estoppel as follows:
Under collateral estoppel, once an issue is actually
and necessarily determined by a court of competent
jurisdiction, that determination is conclusive in
subsequent suits based on a different cause of action
involving a party to the prior litigation.
When the prior determination was in a criminal case, and the
subsequent suit is civil, this same principle applies. The Court
of Appeals for the Fourth Circuit (to which an appeal in this
case would lie) has held that “a defendant is precluded [by
collateral estoppel] from retrying issues [in a criminal
information] necessary to his plea agreement in a later civil
suit”. United States v. Wight, 839 F.2d 193, 196 (4th Cir.
1987); see also Arctic Ice Cream Co. v. Commissioner, 43 T.C. 68,
75 (1964) (“a plea of guilty * * * is a conclusive judicial
admission of all of the essential elements of the offense which
the indictment charges”).
The three Code sections involved in this collateral estoppel
question are section 7201 (defining the crime of “attempt[ing]
* * * to evade or defeat any tax”), section 6501(c)(1) (extending
indefinitely the period of limitation for assessment of tax “[i]n
the case of a false or fraudulent return with the intent to evade
tax”), and section 6663(a) (imposing a civil penalty for
underpayments “due to fraud”). Mr. Williams was previously
convicted of “attempt[ing] * * * to evade or defeat” his income
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tax liability for 1993 through 2000 (under section 7201), whereas
the issues now before us are whether he filed “false or
fraudulent return[s] with the intent to evade tax” (under
section 6501(c)(1)), and whether he had tax underpayments “due to
fraud” (under section 6663). Though the “evade or defeat”
wording of the criminal statute does not include the “fraud”
vocabulary of the two civil statutes, an evasion conviction
establishes fraud. We have repeatedly held that “[a] taxpayer is
collaterally estopped from denying civil tax fraud under * * *
[the predecessor of section 6663] when convicted for criminal tax
evasion under section 7201 for the same taxable year.” DiLeo v.
Commissioner, 96 T.C. 858, 885 (1991), affd. 959 F.2d 16 (2d Cir.
1992).5 Because Mr. Williams was convicted of tax evasion for
1993 through 2000, he is estopped from contesting the essential
elements of criminal tax evasion with respect to tax years 1993
through 2000, which are “identical” to the elements of civil tax
fraud. Uscinski v. Commissioner, T.C. Memo. 2006-200.
Mr. Williams does not dispute wholesale this operation of
collateral estoppel in litigation under the Internal Revenue
5
See also Amos v. Commissioner, 43 T.C. 50, 55 (1964), affd.
360 F.2d 358 (4th Cir. 1965); Arctic Ice Cream Co. v.
Commissioner, 43 T.C. 68, 74-76 (1964). Because a conviction for
criminal tax evasion under section 7201 conclusively establishes
civil tax fraud under section 6663 in the same tax year, the
unlimited statute of limitations of section 6501(c)(1) is also
applicable. See DiLeo v. Commissioner, 96 T.C. 858, 885 (1991),
affd. 959 F.2d 16 (2d Cir. 1992); Amos v. Commissioner, supra at
55.
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Code. He concedes that his guilty plea and conviction
collaterally estop him from contesting that he fraudulently
underpaid his taxes sometime within 1993 to 2000, but he disputes
that he is estopped from denying tax fraud for the entire period
or for any given year therein.
2. Mr. Williams’s Arguments Against Collateral
Estoppel Lack Merit.
Mr. Williams contends that his criminal conviction should
estop him from denying only the generality that he committed tax
fraud at some time within 1993 to 2000--not for every year in
that period, nor even in any given year therein--because (he
says): (I) the District Court did not “actually and necessarily”
determine, and the parties did not agree, that he committed
criminal tax evasion in each and every one of the 8 tax years at
issue, because he merely pleaded guilty to criminal tax evasion
sometime within 1993 to 2000, not for the entire period or any
given year therein; (ii) respondent relies on the contents of the
superseding criminal information to invoke collateral estoppel,
but Mr. Williams did not adopt the contents of the superseding
criminal information or allocute to specific facts in his guilty
plea that could estop him from denying criminal tax evasion in
any given year; and (iii) the utility of ruling on whether he
fraudulently underpaid his income taxes in any given year before
determining the amount of tax evaded is negligible and does not
materially advance the resolution of this case.
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a. Tax Years Covered by the Guilty Plea
Mr. Williams alleges that the District Court did not (in the
language of Montana) “actually and necessarily” determine--and
the parties did not agree--that he committed criminal tax evasion
in each and every one of the 8 tax years at issue. Instead,
Mr. Williams argues that he merely pleaded guilty to criminal tax
evasion at some point within 1993 through 2000.
Mr. Williams properly cites Montana v. United States, supra
at 153-154, for the proposition that collateral estoppel applies
once an issue is “actually and necessarily” determined. However,
by accepting Mr. Williams’s guilty plea and entering a judgment
of conviction against him, the District Court did “actually and
necessarily” determine that he committed criminal tax evasion in
each tax year from 1993 through 2000. The plain language of the
tax evasion count of the superseding criminal information, to
which Mr. Williams pleaded guilty and for which he was convicted,
states:
J. BRYAN WILLIAMS, the defendant, unlawfully, willfully
and knowingly did attempt to evade and defeat a
substantial part of the income tax due and owing by J.
BRYAN WILLIAMS and his spouse to the United States of
America for the calendar years 1993 through 2000”.
[Emphasis added.]
Mr. Williams personally and explicitly admitted his guilt with
equivalent language, stating at his plea hearing: “I * * *
believe that I am guilty of evading the payment of taxes for the
tax years 1993 through 2000.” Thus, there is no question that,
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when the court accepted his plea and found him guilty,
Mr. Williams was convicted of criminal tax evasion “for the
calendar years 1993 through 2000”.
b. Rejection of Superseding Criminal Information
and Allocution to Specific Facts
If a defendant pleads guilty but denies particular
allegations in the indictment or criminal information, then it is
possible that collateral estoppel may not bind the defendant to
those denied allegations,6 and Mr. Williams attempts to invoke
such an exception here. He asserts that he did not allocute or
admit to any specific facts in the superseding criminal
information that could estop him from denying that he committed
criminal tax evasion in any of the 8 tax years at issue.
Instead, Mr. Williams argues that he merely pleaded guilty to
having committed criminal tax evasion at some point within the
span of 1993 through 2000, and that he denied the prosecutor’s
particular allegations. He bases this argument, in large part,
on two statements (quoted above) that his defense counsel made
about the conspiracy count at his plea hearing, to the effect
6
See United States v. Tolson, 988 F.2d 1494, 1501 n.6 (7th
Cir. 1993) (“absent evidence that the defendant reserved the
issue in the plea, he may not challenge the facts in the
indictment and plea agreement”) (citing United States v. Gilliam,
987 F.2d 1009, 1014 (4th Cir. 1993) (“a plea of guilty to an
indictment containing an allegation of the amount of drugs for
which a defendant is responsible may, in the absence of a
reservation by the defendant of his right to dispute the amount
at sentencing, constitute an admission of that quantity for
sentencing purposes”)).
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that “we’re not adopting or accepting the facts as stated in the
conspiracy count,” and that “we are not adopting the facts that
are stated in that [conspiracy] count.”
Mr. Williams’s plea agreement explicitly provides that he
agreed to plead guilty to both counts of the superseding criminal
information. Thus, the allegations in both counts of the
superseding criminal information are arguably necessary to
Mr. Williams’s plea agreement, and he might be precluded here
from retrying even the facts underlying the conspiracy count.
However, the facts most relevant here are not the facts of
the conspiracy count but the facts of the tax evasion count.
Even if Mr. Williams had sufficiently denied the facts of the
conspiracy count so as to be free to dispute those facts in
subsequent litigation, neither Mr. Williams nor his defense
counsel denied in whole or in part the facts underlying the tax
evasion count of the superseding criminal information, which
charged him with criminal tax evasion. Both of the above
statements that Mr. Williams cites as his denial of the contents
of the superseding criminal information explicitly refer to the
conspiracy count, and that count alone. Mr. Williams did not
specifically deny any particular fact, allegation, or issue in
the tax evasion count of the superseding criminal information at
his plea hearing or otherwise. Thus, Mr. Williams is estopped
from denying the contents of the tax evasion count, including the
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charge that he “unlawfully, willfully and knowingly did attempt
to evade and defeat a substantial part of the income tax due and
owing by J. BRYAN WILLIAMS and his spouse to the United States of
America for the calendar years 1993 through 2000”. (Emphasis
added.)
In fact, Mr. Williams did allocute to specific facts at his
plea hearing that belie his claim that he denied that (or
reserved whether) he committed criminal tax evasion in each and
every one of the 8 tax years at issue. In response to the
District Court judge’s question as to “what he did”, Mr. Williams
stated (as is quoted above)--
• that he “received [income] from foreign sources
during the years 1993 to 2000”;
• that “the funds * * * and all the interest income
were taxable income to me. However, [on] the
calendar year tax returns for ‘93 through 2000, I
chose not to report the income * * * to the
Internal Revenue Service in order to evade
substantial taxes owed thereon”; and
• that he was “guilty of evading the payment of
taxes for the tax years 1993 through 2000.”
c. Utility of Resolving Tax Fraud Issue
Respondent has moved only for partial summary judgment.
Respondent requests a holding that Mr. Williams committed fraud
but defers the question of the amount of his liability.
Mr. Williams argues that it serves little or no purpose for this
Court to rule on whether an underpayment in any of the tax years
at issue is due to fraud before it has determined the amount, if
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any, of such underpayment. He argues that “the utility of such a
ruling is negligible and not worth the time and resources of the
Court and counsel”, because “it does not materially advance the
litigation, nor does it narrow the issues.” However, a holding
on whether Mr. Williams committed fraud does narrow the issues
before this Court, and we have previously ruled on the fraud
issue before resolving the amount of the underpayment in other
tax fraud cases. See, e.g., Uscinski v. Commissioner, T.C. Memo.
2006-200.
Therefore, we hold that respondent has shown that he is
entitled to summary judgment with respect to the issue of whether
collateral estoppel applies to establish civil tax fraud in each
tax year from 1993 through 2000. We hold that the statute of
limitations does not bar assessment of Mr. Williams’s tax
liability for those years, and that he will be liable for the
fraud penalty. However, the issue of the amounts of the
deficiencies of tax and penalties for 1993 through 2000, and the
issue of accuracy-related penalties, remain for trial.
To reflect the foregoing,
An appropriate order will be
issued.