United States v. Sorensen
2015 U.S. App. LEXIS 16362
| 10th Cir. | 2015Background
- From 2002–2007 Dr. Jerold Sorensen routed over $1.5 million of dental income into “pure trusts” marketed by Financial Fortress Associates (FFA) and stopped reporting much of that income to the IRS; he also retitled valuable assets in trust names and used trust funds for personal expenses.
- Sorensen paid FFA and attorney Melissa Sugar to form trusts and open a Northside Management account (with an EIN but no trust tax filings); he controlled the account and signed checks. Account activity exceeded $1 million; the trusts never filed returns.
- His longtime accountant warned that the IRS considered the pure-trust program a scheme; Sorensen nonetheless continued, later hiring other preparers and receiving mixed advice. He admitted underpaying taxes by more than $1.5 million.
- In 2013 a grand jury indicted Sorensen under the omnibus clause of 26 U.S.C. § 7212(a) (corruptly endeavoring to obstruct or impede the due administration of the internal revenue laws); a jury convicted him and the district court sentenced him to 18 months’ imprisonment.
- On appeal Sorensen raised seven challenges (choice of charge §7212(a) v. tax-evasion statutes; jury instructions including knowledge-of-illegality and deliberate-ignorance; unanimity on “means”; denial of surrebuttal; alleged prosecutorial misstatements; cumulative error). The Tenth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument (Sorensen) | Defendant's Argument (Government) | Held |
|---|---|---|---|
| Availability of §7212(a) charge when conduct also constitutes tax evasion (§7201) | Charging under §7212(a) was improper when the conduct amounted to tax evasion punishable under §7201 and related statutes | Government has discretion to prosecute alternative offenses; §7212(a) covers conduct that corruptly impedes due administration and is distinct from §7201 | §7212(a) conviction proper; tax-evasion overlap does not preclude §7212(a) prosecution and Sorensen’s conduct (e.g., trusts without EINs to thwart IRS) fit omnibus clause |
| Whether jury should have been instructed that defendant must know the conduct is unlawful (knowledge-of-illegality instruction) | Court should have instructed jury that defendant must know the advantage sought was unlawful | The court’s instruction (defining “corruptly” as acting “knowingly and dishonestly” to gain an unlawful advantage) plus a good-faith instruction sufficed to require knowledge of illegality | No reversible error: instruction requiring acting “knowingly and dishonestly” and good-faith charge adequately covered knowledge-of-illegality issue |
| Appropriateness of deliberate-ignorance (willful-blindness) instruction | Instruction improper because defendant denied criminal intent, not factual knowledge | Evidence supported deliberate avoidance of knowledge (warnings from accountant, red flags, refusal to accept certified mail, failing to investigate) | Affirmed: deliberate-ignorance instruction was appropriate given evidence that Sorensen consciously avoided learning trusts were illegal |
| Jury unanimity instruction allowing conviction if jurors unanimously agree on any one of multiple listed "means" | Instruction flawed and could permit conviction on insufficient grounds (e.g., mere underreporting or failure to file) | Instruction increased government’s burden (required unanimity on at least one means); overall harmless because other means were strongly supported | District court erred in formulating a nonstandard unanimity instruction but error favored defendant and was harmless; plain-error review of specific complaint failed because other means provided strong support |
| Denial of surrebuttal testimony (defense counsel wanted to call proffer counsel to rebut government rebuttal) | Denial prevented rebutting new issues and violated defendant’s rights; surrebuttal testimony was necessary after government’s rebuttal | Court exercised discretion to control order of proof; witness was available during defense case-in-chief and the defense declined to call him earlier | No abuse of discretion. Court permitted the testimony in the case-in-chief and reasonably denied tactical surrebuttal after hearing rebuttal testimony |
| Alleged prosecutorial misstatements in closing; request for mistrial and cumulative-error claim | Prosecutor misstated defense expert’s interview and other facts, harming Sorensen’s credibility and merit a mistrial or reversal | Misstatements were minor, the court cured at least one by instruction, and government’s case was strong; cumulative-error argument waived or meritless | No reversible prosecutorial error or mistrial; misstatements harmless in context and cumulative-error argument waived/insufficient |
Key Cases Cited
- United States v. Williamson, 746 F.3d 987 (10th Cir. 2014) (discusses meaning of “corruptly” under §7212(a) and whether knowledge-of-illegality is required)
- United States v. Popkin, 943 F.2d 1535 (11th Cir. 1991) (broad reading of §7212(a) omnibus clause; obstruction encompasses schemes to thwart tax administration)
- United States v. Batchelder, 442 U.S. 114 (1979) (government may prosecute under any statute that the defendant’s conduct violates)
- United States v. Aguilar, 515 U.S. 593 (1995) (interpreting obstruction statute to require knowledge of pending proceeding; Supreme Court framework discussed and distinguished)
- Neder v. United States, 527 U.S. 1 (1999) (harmless error standard for omission of an element in jury instructions)
- Yates v. United States, 354 U.S. 298 (1957) (jury verdict reversible if supportable on legally insufficient ground and impossible to tell which ground jury relied upon)
- United States v. Melot, 732 F.3d 1234 (10th Cir. 2013) (examples of means supporting §7212(a) conviction: false IDs/EINs, nominee accounts, structuring deposits, titling property in nominees)
- United States v. Fingado, 934 F.2d 1163 (10th Cir. 1991) (upholding deliberate-ignorance instruction where defendant avoided learning tax obligations)