United States v. Wasson

• Decision Date: 21 May 2012
• Docket Number: No. 10–2577.,10–2577.
• Citation: 679 F.3d 938,109 A.F.T.R.2d 2012
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Brian WASSON, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

679 F.3d 938

109 A.F.T.R.2d 2012-2186

UNITED STATES of America, Plaintiff–Appellee,

v.Brian WASSON, Defendant–Appellant.

No. 10–2577.

United States Court of Appeals,Seventh Circuit.

Argued May 3, 2011.

Decided May 21, 2012.

Timothy A. Bass (argued), Attorney, Office of the United States Attorney, Springfield, IL, for Plaintiff–Appellee.

Tracy L. Hightower–Henne (argued), Attorney, Hightower Law LLC, Omaha, NE, for Defendant–Appellant.

Before ROVNER and WILLIAMS, Circuit Judges, and YOUNG, District Judge.^*

ROVNER, Circuit Judge.

Brian K. Wasson was convicted after a bench trial of one count of conspiracy to defraud the United States, see18 U.S.C. § 371, and six counts of aiding in the filing of a false tax return, see26 U.S.C. § 7206(2). He was sentenced to a total of 180 months' imprisonment to be followed by three years of supervised release. Wasson appeals, arguing that the district court erred by denying his motion to dismiss the indictment because he did not receive a speedy trial. He also challenges the sufficiency of the evidence and claims that his sentence violates the ex post facto clause of the Constitution.

I.

Wasson's conviction stems from his involvement with a more extensive tax fraud conspiracy involving the now defunct The Aegis Company.¹ The Aegis Company was founded in Palos Hills, Illinois. Aegis promoted and sold “trusts” to wealthy taxpayer clients, promising them asset protection and reduced tax liability. These trusts, which were essentially shams, were used to divert the clients' taxable income, thereby reducing or eliminating liability for the taxpayer client. Sometime in 1997, Wasson and his codefendant Joseph Starns founded “Midwest Alternative Planning” in Danville, Illinois. They used this business to market the Aegis trust scheme. Starns introduced the Aegis system to the third codefendant, John Wolgamot, who was an attorney in Danville. Wolgamot assisted by preparing the trust entities for Wasson and Starns's clients.

Generally clients paid between $20,000 and $40,000 to set up the trusts under the Aegis system and an additional annual “financial planning” or “management” fee of between $3,000 and $7,000. For example, one Aegis client, Dennis Frichtl, paid approximately $20,000 to set up a domestic and two “offshore charitable” trusts into which he transferred his business profits. Frichtl owned his own welding business and made between $3 and $4 million annually in gross sales. He was told to transfer the money from the first to the second trust and finally to the third, offshore trust, which he was told had no IRS reporting requirements. Using this method, he went from paying between $20,000 and $25,000 annually in taxes to paying no income tax. He later sold his business for $5.2 million, and Wasson assisted him in wiring the profit from the sale overseas into an account that could still be accessed by Frichtl's personal credit card.

In March 2000, the Internal Revenue Service Criminal Investigation Division executed a search warrant on the Aegis offices in Palos Hills. Subsequently, Wasson and others continued marketing the Aegis trusts, despite ongoing investigation by the IRS and the fact that multiple Aegis participants had by this time begun receiving requests for audits. In May 2003, the FBI executed search warrants on the Aegis offices and the residence of top Aegis official Michael Vallone. All told Wasson, Starns, and Wolgamot assisted at least twelve taxpayers using the Aegis system to conceal millions of dollars in income from the IRS. They received over $350,000 in fees and commissions and caused a tax loss to the United States of approximately $6 million.

As we will discuss in more detail below, the path to trial for Wasson was a long one. It began in September 2006, when he was charged in an initial indictment with aiding in the filing of a false tax return in violation of 26 U.S.C. § 7206(2). The grand jury then twice superseded the indictment in order to add Starns and Wolgamot as defendants, include additional counts under § 7206(2), and charge all three defendants with conspiracy to defraud the IRS in violation of 18 U.S.C. § 371. The third superseding indictment was returned on May 2, 2007.

In the interim between the first and third indictments, the district court granted a motion by Wasson to continue and also entered a finding in January 2007 that the case was complex. In so finding, the court granted the government's unopposed request for a finding of complexity. The parties and the court acknowledged the “paper-intensive” nature of tax cases generally and the complex nature of this case specifically: the court noted in particular that the charges involved a conspiracy with multiple defendants as well as multiple taxpayers' returns. Accordingly, the court concluded that the ends of justice warranted excluding time until May 1, 2007. See18 U.S.C. § 3161(h)(7)(A). At the status hearing on May 1, Starns moved to appoint counsel, and the government informed the court that it would be returning a third superseding indictment the following day and adding a third defendant (Wolgamot). To accommodate Starns's new counsel and Wolgamot's future counsel's need to familiarize him or herself with the case, the court made another ends-of-justice finding and excluded time until a scheduled hearing on July 17, 2007.

Following the return of the third superseding indictment, Wasson moved on June 8, 2007 to continue trial. On June 28, the court ruled on Wasson's motion and continued trial until March 31, 2008. At that time, the court “reaffirmed” its previous finding that the case was complex and again excluded time under the ends-of-justice exception, see18 U.S.C. § 3161(h)(7)(A). Starns's counsel also informed the court that Starns had been diagnosed with cancer. Starns subsequently passed away in August 2007.

On January 14, 2008, Wasson—joined by Wolgamot—again moved to continue the trial. On February 7, the court granted Wasson's motion, vacated the March trial date, and reset the trial to September 22, 2008. The court repeated its ends-of-justice finding, see18 U.S.C. § 3161(h)(7)(A), and excluded time until the September trial date.

Before the September date arrived, the government moved to continue. This time the motion was based on Wolgamot's guilty plea, which the government suggested changed the landscape of the case such that more preparation time was necessary. Government counsel also requested the continuance to ensure “continuity of government counsel” because he was participating for up to six months in a detail in Washington, D.C. related to the Guatanamo Bay detainee litigation. After noting the likelihood that Wasson would have himself been seeking a continuance due to the “changing complexity” of the case, the court continued the trial until March 2, 2009.

Before trial commenced on March 2, Wasson moved to dismiss the indictment for failure to comply with the Speedy Trial Act. See18 U.S.C. §§ 3161–74. The district court denied Wasson's motion, noting that there had been specific reasons supportingeach continuance and that in each instance it had balanced the ends of justice against the interests of the parties and the public. The court also observed that the parties had agreed from the beginning that it was a complex case, and that Wasson had either requested or agreed to every continuance between his indictment and the scheduled trial on March 2, 2009.

During the 12–day bench trial, the government presented numerous witnesses and close to 1,000 documentary and summary exhibits. Wolgamot testified pursuant to his guilty plea about his involvement in preparing the trust documents for Aegis clients. Eleven taxpayers who had purchased the Aegis system testified, and the court also heard from four IRS agents who had worked on the case. Wasson maintained throughout trial that he had a good-faith belief in the legality of the Aegis system, and elicited testimony from various government witnesses that he had consistently defended its legality in his interactions with both the government and his clients. The district court denied Wasson's oral motion for a judgment of acquittal on March 17, 2009.

The district court found Wasson guilty on all charges in December 2009. Between the conclusion of trial and the court's verdict, the parties obtained and reviewed trial transcripts and presented written closing arguments to the court. The court rejected Wasson's good-faith defense and concluded that the evidence of Wasson's guilt was “overwhelming.” The court also denied Wasson's renewed motion (filed pro se) to dismiss the indictment based on the alleged speedy trial violation.

Wasson then renewed his motion for acquittal and moved for a new trial, arguing that the court had erred with its preliminary finding (before trial) that a conspiracy existed, thereby allowing inadmissible hearsay into evidence at trial that prejudiced him. The court denied both motions. Specifically, the court rejected Wasson's contention that he lacked the intent to defraud the United States. It also concluded that the evidence presented at trial was “more than sufficient to establish the existence of a conspiracy.”

Over Wasson's objection, the district court calculated his advisory guideline range using the 2008 Sentencing Guidelines Manual instead of the manual in existence when Wasson committed his crimes. The court then sentenced Wasson to 180 months—a term of imprisonment in the middle of the 168– to 210–month advisory guideline range. The court believed such a lengthy term of imprisonment appropriate in light of the “extensive, orchestrated” nature of the Aegis scheme and the need “to deter others from violating the tax laws.”

After the district court imposed its sentence, Wasson twice moved for bond pending appeal, arguing that the alleged violation of the Speedy Trial Act constituted a substantial question of law warranting his release. The district court denied his...