Sentencing Reform

Back in 2007, a Los Angeles judge sentenced actress Lindsay Lohan to one day in jail for misdemeanor drunk driving and cocaine charges. California’s prisons are notoriously crowded, so Lohan walked out of the joint after just 84 grueling minutes. She didn’t even have time to change into an orange jumpsuit. Lohan’s “sentence” drew headlines as an example of lax justice. But now comes news that a judge has sentenced a 79-year-old widow to less than one minute of probation — for tax evasion, no less. Can the punishment possibly suit the crime?

First, a little background. The Justice Department has made cracking down on secret foreign bank accounts a top priority. Those efforts got a huge boost when Bradley Birkenfeld, a banker for Zurich-based UBS, blew the whistle on the bank’s efforts to help U.S. depositors avoid tax on their accounts. UBS settled the case by paying a record 780 million dollar fine and turning over information on nearly 5,000 U.S. depositors.

Around that same time, the IRS offered an amnesty program for taxpayers who had concealed their accounts to avoid prosecution by ‘fessing up, paying back taxes and fines, and fingering the advisors who helped them hide their assets from the government. Since then, over 38,000 taxpayers have entered the program, paying $5.5 billion and pledging $5 billion more to make good.

Now, back to our story. In 2000, money manager Mortimer Curran died in Palm Beach. Curran left his wife Mary an account at UBS, which he himself had inherited from an aunt in Monte Carlo. Mary, who has no college education and hasn’t worked outside the home in over 50 years, took the bank’s advice and left the money in the account. She continued to live modestly in the same house with green and white formica countertops that she and Mortimer had bought in 1982. (OK, next door to Bernard Madoff — but still, green and white formica countertops.) And she devoted most of her time to volunteer work on behalf of the Opportunity Inc. Early Childhood Center and the Rehabilitation Center for Children and Adults.

In 2009, after the account had grown to $43 million, she contacted a lawyer. Together, they decided to report her account. Unfortunately, he didn’t file the disclosure paperwork until three weeks after UBS had “ratted her out” as part of its own settlement. That meant she couldn’t join the program. Uh oh.

Last November, the Justice Department indicted Mrs. Curran. In January, she pled guilty to two counts of tax evasion, paying $667,700 in back tax and a $26.6 million civil penalty. And on April 13, Curran appeared before U.S. District Court Judge Kenneth Ryskamp for sentencing. She still faced up to 37 months for the crimes she had admitted. Would she serve hard time? Get a jailhouse tattoo? Maybe join a prison gang?

No, no, and, thank goodness, no. Ryskamp sentenced the “unsophisticated” Curran to a year of probation — then immediately revoked it. He said “this really is a tragic situation,” and “the government should have used a little more discretion.” He even urged Curran’s attorney to seek a presidential pardon for his client — then told the prosecutors it would be “spiteful” for them to oppose it!

Mary Curran’s five seconds of probation may seem like the lightest possible slap on the wrist. But that $26 million penalty hurts. Too bad the Currans didn’t understand that they didn’t have to risk so much to pay less tax. They just needed a better plan. If you’re ready to pay less tax — without risking even five seconds of probation to do it — call us for the plan that helps you do just that!

Peter J Tarantino CPA
Tarantino & Company, CPAs
704 Macy Drive
Roswell, GA 30076

At Tarantino & Co, CPA also stands for Close Personal Attention ®

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