United States v. Zukerman
897 F.3d 423
| 2d Cir. | 2018Background
- Morris Zukerman, founder of MEZCO, pleaded guilty (June 27, 2016) to tax evasion (26 U.S.C. § 7201) and obstructing the administration of the tax laws (26 U.S.C. § 7212(a)) for schemes spanning roughly 2007–2015 that produced an estimated $45M tax loss.
- Zukerman falsified documents, caused others (family, employees) to file false returns, and provided false materials to IRS auditors; MEZCO paid $37M in restitution pursuant to the plea agreement.
- Plea agreement stipulated to a Guidelines imprisonment range of 70–87 months and a Guidelines fine range of $25,000–$250,000; the district court sentenced Zukerman to 70 months, $37M restitution, and a $10M fine (March 21, 2017).
- Zukerman appealed only the fine as procedurally and substantively unreasonable; the Second Circuit remanded for supplemental explanation under Jacobson and then reinstated the appeal after a district-court supplemental memorandum.
- The district court imposed the $10M fine by (1) considering the nature/scale of the crimes, (2) Zukerman's history/uncharged conduct and refusal to confess, (3) general and specific deterrence (given his wealth and recidivism), (4) the $45M estimated tax loss and restitution gap, and (5) Zukerman's substantial financial resources.
Issues
| Issue | Plaintiff's Argument (Zukerman) | Defendant's Argument (Government) | Held |
|---|---|---|---|
| Whether district court misapplied the Guidelines by not using pre-November 1, 2015 version (U.S.S.G. §5E1.2(h)) | Zukerman: conduct "through 2015" requires pre-Nov 1, 2015 Guidelines; court doubled the fine range | Government: conduct spans into 2015 and plea acknowledged applicable range; district court acted correctly | Court: No plain error; "through 2015" reasonably includes post-Nov 1 and plea agreement recognized the applied range — affirmed |
| Whether Zukerman was given adequate opportunity to show inability to pay the fine | Zukerman: affidavit (Aug 2016) outdated by Mar 2017 sentencing; court relied on stale info | Government: court solicited financial info, Zukerman failed to update or object and had multiple chances to do so | Court: No plain error; defendant had ample opportunity and failed to rebut financial info — affirmed |
| Whether $10M fine was substantively unreasonable (excessive) | Zukerman: $10M is excessive compared to Guidelines range and other tax cases; wealth-based punishment improper | Government: fine justified by scope, recidivism, deterrence, gap between tax loss and restitution, and defendant's resources | Court: Deferential abuse-of-discretion review; fine reasonable given multifactor §3553(a) analysis (nature of crime, history, deterrence, financial resources, restitution) — affirmed |
| Whether district court’s explanation was inadequate | Zukerman: initial explanation insufficient (Jacobson remand) | Government: supplemental memorandum supplied adequate, reasoned basis | Held: Remand cured any explanation issues; supplemental memorandum adequate — affirmed |
Key Cases Cited
- United States v. Jacobson, 15 F.3d 19 (2d Cir. 1994) (authorizes summary order remands for supplemental explanation)
- United States v. Villafuerte, 502 F.3d 204 (2d Cir. 2007) (plain-error standard for forfeited sentencing objections)
- Gall v. United States, 552 U.S. 38 (2007) (reasonableness review of sentencing and deference to district courts)
- United States v. Thavaraja, 740 F.3d 253 (2d Cir. 2014) (abuse-of-discretion standard for substantive reasonableness)
- United States v. Broxmeyer, 699 F.3d 265 (2d Cir. 2012) (modest role of appellate review in sentencing reasonableness)
- United States v. Elfgeeh, 515 F.3d 100 (2d Cir. 2008) (defendant must be given at least minimal opportunity to show inability to pay a fine)
- United States v. Cavera, 550 F.3d 180 (2d Cir. 2008) (deferential review of variances and judge's sentencing discretion)
- United States v. Jones, 460 F.3d 191 (2d Cir. 2006) (historic role of sentencing judges to consider fair and just sentence)