United States v. Stegman
2017 U.S. App. LEXIS 20598
| 10th Cir. | 2017Background
- Kathleen Stegman owned and operated Midwest Medical Aesthetics Center (business name changed from MMACI to MMACPA/P.A.) and used related LLCs (notably Samson, LLC) to divert client payments for personal use.
- She purchased large numbers of money orders (2007–2009) and reported zero cash income while paying personal expenses and acquiring high-value assets; IRS civil audit (2007–2008) escalated to criminal investigation (2010).
- Indicted on tax-evasion counts for 2007–2010 (personal and corporate) and a conspiracy count; trial jury convicted Stegman of personal tax evasion (2007–2008) and two corporate tax evasion counts (later dismissed by the district court), acquitted on one corporate count and the conspiracy count.
- Pretrial and trial disputes included: mid-trial amendment of the indictment to drop “Inc.” from Midwest’s name; use of corporate ledgers obtained via IRS summons; destruction of an earlier (2000–2001) IRS civil-audit file; admission of statements/documents from deceased tax preparer Don Lake; and the calculation of sentencing enhancements (tax loss aggregation, sophisticated means, obstruction).
- District court sentenced Stegman to 51 months’ imprisonment, three years supervised release, $100,000 fine, and $68,733 restitution. Tenth Circuit affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Indictment amendment (dropping “Inc.”) | Amendment substantively changed charged entity and prejudiced defense | Amendment was form-only, defendant had notice, no prejudice | Affirmed: amendment was form only and permissible |
| Use of corporate records obtained via summons (Braswell) | Introduction/attribution of summoned ledgers to Stegman violated Fifth Amendment (Braswell) | Questions did not attribute the act of production to Stegman; ledgers admissible as corporate/business records | Affirmed: no Braswell violation |
| Destruction of prior IRS civil-audit file (2000–2001) | File was exculpatory (good-faith and cash-hoard defenses); destruction warranted dismissal | File was not apparently exculpatory, could be obtained elsewhere, and destruction not in bad faith | Affirmed: district court did not err denying dismissal (no apparent exculpatory value or bad faith) |
| Admission of statements/documents from deceased preparer Don Lake (Confrontation Clause) | Lake’s notations (e.g., “workpapers used…”) were testimonial and inadmissible without confrontation | Most documents were Stegman’s financial documents/business records or statements on her behalf; Lake’s fax notation was non-testimonial and informal | Affirmed: admission did not violate Confrontation Clause |
| Sentencing—tax-loss aggregation and enhancements (sophisticated means, obstruction) | District court improperly included corporate tax loss after acquittal and misapplied enhancements | Corporate and individual tax losses were inextricably intertwined; enhancements supported by concealment scheme, money orders, LLCs, ledger alterations, shredding, witness tampering | Affirmed: aggregate loss and enhancements properly applied |
Key Cases Cited
- Russell v. United States, 369 U.S. 749 (court may not amend indictment except by grand jury resubmission)
- Stirone v. United States, 361 U.S. 212 (variance between indictment and proof can be fatal)
- United States v. Pina, 974 F.2d 1241 (10th Cir.) (distinguishing form vs. substance in indictment amendments)
- United States v. Dowdell, 595 F.3d 50 (1st Cir. 2010) (ministerial corrections permitted if no prejudice)
- Braswell v. United States, 487 U.S. 99 (1988) (custodian of corporate records cannot invoke Fifth Amendment to resist subpoena; limits on evidentiary use)
- Crawford v. Washington, 541 U.S. 36 (2004) (Confrontation Clause protects testimonial out-of-court statements)
- Brady v. Maryland, 373 U.S. 83 (1963) (prosecution’s suppression of materially favorable evidence violates due process)
- Trombetta v. California, 467 U.S. 479 (1984) (duty to preserve evidence extends to evidence of apparent exculpatory value)
- Arizona v. Youngblood, 488 U.S. 51 (1988) (failure to preserve potentially useful evidence requires bad faith for due-process violation)
- United States v. Harry, 816 F.3d 1268 (10th Cir.) (standards for lost/destroyed evidence and review of district court findings)
- United States v. Rodebaugh, 798 F.3d 1281 (10th Cir.) (relevant conduct may include acquitted or uncharged acts for sentencing)