United States v. John McKinney
2012 U.S. App. LEXIS 14339
| 7th Cir. | 2012Background
- John McKinney and family were charged with conspiracy to defraud the IRS, tax evasion, and false statements; he pled guilty to all counts.
- During 1999–2006 McKinney allegedly concealed income by moving funds to nominee accounts and lied to Revenue Officers about ability to pay taxes.
- To bypass tax liens, Chamethele McKinney obtained a mortgage using false employment information; mortgage funds derived from McKinney’s business income.
- Belinda McKinney also obtained a mortgage with false employment details, diverting business income to keep it from the IRS.
- The district court applied two U.S.S.G. enhancements: failure to report income over $10,000 from criminal activity and obstruction of justice, sentencing McKinney to 57 months concurrent.
- McKinney challenged both enhancements on grounds related to duty to report and whether lies constituted obstruction; the court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to report mortgage income | McKinney argues he had no duty since wife received the mortgage proceeds. | McKinney asserts no reporting duty because he wasn’t the reporter of the income. | Enhancement valid; co-conspirator duty to report applies; McKinney liable. |
| Relevant conduct connection to tax evasion | Mortgage fraud not part of the same scheme with McKinney’s tax evasion. | Mortgage fraud was not conduct by defendant in furtherance of the conspiracy. | Mortgage fraud conduct is part of the same common scheme; relevant conduct upheld. |
| Obstruction of justice enhancement | Lies told before investigation cannot support obstruction. | Lies were not material or obstructive. | False statements were material and obstructive; 3C1.1 enhancement proper. |
| Materiality and impact of misrepresentations | Lies did not thwart investigation as civil matters. | Lies delayed and diverted resources from the IRS. | Statements caused investigation to be delayed and resources expended; upheld. |
Key Cases Cited
- United States v. Oestreich, 286 F.3d 1026 (7th Cir. 2002) (duty to report income by conspirators)
- United States v. Acosta, 85 F.3d 275 (7th Cir. 1996) (relevant conduct and common scheme)
- United States v. Vallar, 635 F.3d 271 (7th Cir. 2011) (obstruction and relevant conduct standards)
- United States v. Urbanek, 930 F.2d 1512 (10th Cir. 1991) (false statements as exculpatory; limits on obstruction)
- Griffin v. United States, 310 F.3d 1017 (7th Cir. 2002) (materiality and impact of statements in obstruction analysis)
- Kindred v. C.I.R., 454 F.3d 688 (7th Cir. 2006) (joint and several liability in joint returns)