U.S. v. Brown, 269

• Decision Date: 16 October 1996
• Docket Number: No. 269,D,269
• Citation: 98 F.3d 690
• Parties: -882, 96-2 USTC P 50,557 UNITED STATES of America, Appellee, v. Douglas BROWN, Defendant-Appellant. ocket 96-1174.
• Court: U.S. Court of Appeals — Second Circuit

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98 F.3d 690 79 A.F.T.R.2d 97-882, 96-2 USTC P 50,557 UNITED STATES of America, Appellee,
v.
Douglas BROWN, Defendant-Appellant. No. 269, Docket 96-1174. United States Court of Appeals,
Second Circuit. Oct. 16, 1996.

Lewis J. Liman, Assistant United States Attorney, Southern District of New York (Mary Jo White, United States Attorney,

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Alexandra Rebay, Assistant United States Attorney, Southern District of New York, of counsel), for appellee.

Herald Price Fahringer, New York, New York (Erica T. Dubno, Lipsitz, Green, Fahringer, Roll, Salisbury & Cambria, New York, New York, of counsel), for defendant-appellant.

Before: MESKILL, WINTER, CABRANES, Circuit Judges.

PER CURIAM:

Defendant Douglas Brown appeals a sentence, consisting primarily of five months' imprisonment, imposed by the United States District Court for the Southern District of New York (Allen G. Schwartz, Judge ). Most of the issues presented in this appeal are disposed of in a summary order entered simultaneously herewith. We write to consider two issues: (1) whether the Supreme Court's recent decision in Koon v. United States, --- U.S. ----, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996), alters this Circuit's long-standing rule that a judge's denial of a motion to depart from a sentence range prescribed by the United States Sentencing Guidelines (the "Guidelines") is not normally appealable, see, e.g., United States v. Martin, 78 F.3d 808, 814-15 (2d Cir.1996); and (2) whether the district court was unaware of its authority to depart downward, thus requiring a vacatur of the sentence and a remand for resentencing.

BACKGROUND

The following statement of facts, drawn from the record on appeal, is not disputed. Brown is an agent for photographers, doing business as Artistic Photographic Services, Inc. In an indictment filed June 27, 1995, the Government charged Brown under 18 U.S.C. § 371 with conspiring with the employees and owners of Robert Abrams Associates, Inc. ("Abrams Associates"), an accounting firm in Manhattan, to defraud the United States and the Internal Revenue Service ("IRS") by evading the payment of Brown's personal and business income taxes from 1985 until 1993. He was also charged with three counts of income tax evasion, in violation of 26 U.S.C. § 7201, for the years 1989, 1990, and 1991.

Beginning in 1985, Brown participated in a complex tax evasion scheme with Abrams Associates, in which Brown claimed numerous deductions on his personal and corporate tax returns based on checks he wrote to bogus business and charitable entities created by Abrams Associates. ¹ To hide the nature of these deductions, the checks were written for small amounts and deposited in numerous phony accounts. Abrams Associates would then return the deposited funds to Brown, minus a 10% cut, either by direct payments or by paying Brown's personal expenses, such as his membership in a beach club. Brown also wrote checks directly to Abrams Associates, claiming these payments as business deductions for professional fees, while in fact Abrams Associates retained only half of these payments as accounting fees and returned the remainder to Brown. Brown failed to report the return of the funds from Abrams Associates as income on his tax returns.

Between 1985 and 1991, Brown submitted 74 "deduction" checks to fifteen fictitious entities totaling $237,813 and 66 "deduction" checks to Abrams Associates totaling $131,000. He signed and filed corporate and personal tax returns between 1985 and 1991 containing over $90,000 in fraudulent deductions, failed to report over $40,000 in personal income on these returns, and understated his capital gains by over $200,000 on a single, large investment.

The Government began investigating Abrams Associates, its owners and its clients in 1992. As a result of those investigations, Brown and over twenty other Abrams Associates' clients have pleaded guilty to offenses relating to tax evasion. Brown pleaded guilty to all four counts of the indictment against him on November 15, 1995.

Prior to sentencing, Brown submitted a lengthy memorandum in which he argued, inter alia, for a downward departure from the sentencing range prescribed by the Guidelines based on "extraordinary family

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circumstances." ² He claimed that his wife, a chronic alcoholic, needs him to ensure that every morning she takes medication that causes nausea if alcohol is consumed. Brown argued that, because he is the only person who can ensure that she takes the required medication, she will relapse into alcoholism and place herself and their two teenage daughters in jeopardy if he is incarcerated.

In expressing his sympathy for Brown's request for a downward departure based on extraordinary family circumstances, Judge Schwartz remarked:

I must tell you the temptation to [depart downward] is strong. I also tell you that if it were not for the guidelines, which I believe are the law of the land and I am required to follow them in this case as I am in other cases where I sometimes disagree strongly with the guidelines, I would do something different.

Nonetheless, the judge declined to exercise his discretion to depart downwards, finding that Browns' family circumstances, while deserving sympathetic consideration, were not sufficiently "extraordinary or unique" to "justify ... a downward departure."

On March 6, 1996, Judge Schwartz sentenced Brown to five months' imprisonment, five months' home...