3rd Circuit Reverses House Arrest Sentence for Tax Evasion

In United States  v. Tomko, No. 05-4997 (3d Cir. 8/20/07), a divided Third Circuit reversed the district court's sentence of home confinement in a tax evasion case.  As Joe Kristan notes:

A Pennsylvania contractor pleaded guilty to committing tax fraud by having his construction company build a mansion. The company, an S corporation, deducted the costs, and the contractor failed to pay report the value of his new mansion as income on his tax return.

The trial judge sentenced him to a year of house arrest in the very same mansion.

The government wasn't amused, so it asked the Federal Court of Appeals for the Third Circuit to impose a harsher sentence. The court decided the government had a point:

We share with the Government concern about the message a sentence of probation for the indisputably serious offense of willful tax evasion sends to the public at large and would-be violators. Tomko’s sentence of probation included home confinement in the very mansion built through the fraudulent tax evasion scheme at issue in this case – an 8,000- square-foot house on approximately eight acres, with a home theater, an outdoor pool and sauna, a full bar, $1,843,500 in household furnishings, and $81,000 in fine art. The perverse irony of this gilded cage confinement was not lost on the Government, it is not lost on us, and it would not be lost on any reasonable public observer of these proceedings, including those would-be offenders who may be contemplating the risks associated with willful tax evasion.

The appeals court ordered a resentencing more in line with federal sentencing guidelines. This is likely to be a 12 to 18-month sentence, to be served in a more spartan setting.

Today's law.com has a detailed report on the case:  3rd Circuit Rules Prison Time "Reasonable" for Tax Cheat; Dissenting Judge Complains that Majority Is Departing from the Court's Post-"Booker" Cases, by Shannon P. Duffy

White-collar criminals are going to find it much more difficult to avoid prison now that the 3rd U.S. Circuit Court of Appeals has declared that a sentence of probation and house arrest for a confessed tax cheat was not "reasonable" despite his extensive charity work that included helping to build homes in the wake of Hurricane Katrina.

But a dissenting judge complained that his colleagues were improperly engaging in a "de novo" review of the sentence instead of giving appropriate deference to the trial judge who had thoroughly explained his reasons for leniency.

For more, see our sister Sentencing Law & Policy Blog.