December 2010 Archives

Driving Under the Influence Can Violate Federal Law

December 31, 2010, by The McKellar Law Firm, PLLC

Most people view Driving Under the Influence (DUI) as a state crime, and for the majority of cases, it is. However, a DUI violation which occurs on federal land, such as a national park or reserve, will be governed by federal law, particularly 36 C.F.R. 4.23.

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This section of the Code of Federal Regulations specifically prohibits operating or being in control of a motor vehicle while: (1) Under the influence of alcohol, or a drug, or drugs, or any combination thereof, to a degree that renders the operator incapable of safe operation; or (2) The alcohol concentration in the operator's blood or breath is 0.08 grams or more of alcohol per 100 milliliters of blood or 0.08 grams or more of alcohol per 210 liters of breath.

Violation of federal DUI law is considered a class B misdemeanor and is punishable as follows:
1. Up to 6 months in federal penitentiary [18 U.S.C. Sec. 3559(a)(7)]
2. Fine not to exceed $5,000 [18 U.S.C. Sec. 3571(a) and (b)]
3. Up to 5 years on probation [18 U.S.C. Sec. 3561]

Additionally, and as with State DUI violations, there may be additional penalties for a federal DUI conviction, such as revocation of a defendant's driver's license by the Tennessee Dept. of Safety, potential enhancement of penalties for future DUI violations, and possible vehicle forfeiture.

Naked Pictures of Girlfriend Results in Child Porn Conviction

December 29, 2010, by The McKellar Law Firm, PLLC

Could receiving naked pictures of your girlfriend or boyfriend result in criminal charges for receiving child porn? For former police officer James Cifala, the answer is yes. Under Maryland state law, 48-year-old Cifala's sexual relationship with a 16-year-old was not illegal, but receiving naked pictures of her was.

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Cifala was sentenced to 5 years in federal prison after pleading guilty to one count of receiving child pornography. The sentence imposed by U.S. District Judge Catherine C. Blake was the lowest statutory sentence possible, but the sentence was still higher than the federal sentencing guidelines.

As reported by The Capital, Prosecutors claimed that Cifala first met the victim in 2007, when she was only 14. The two spoke about having sex, but Cifala told her they had to wait until she was 16 years old - when it would be legal. Over the next two years, Cifala used social networking websites and a prepaid wireless phone to stay in contact with the victim. Cifala and the victim traded more than 1,300 text and picture messages in the three weeks between Aug. 14 and Sept. 6, 2009.

18 U.S.C. § 2252 sets forth federal criminal law regarding child pornography. A person is specifically prohibited from receiving images of a sexual nature involving minors. As Mr. Cifala learned, this law applies to "sexting" cases involving minors as well.


Additional Resources
"Ex-Cop Gets Five Years for Child Porn," The Capital (online edition), December 29, 2010
18 U.S.C. § 2252

Utah Man Sentenced For Tax Evasion Related to His "Private Church"

December 21, 2010, by The McKellar Law Firm, PLLC

Tax evasion cases come in many shapes and sizes, including the creation of fake entities such as trusts or a religious entity. While trusts and religious entities are not inherently illegal, they can often be used illegally to evade the payment of taxes.

John Gauruder was sentenced earlier this week to 42 months in prison for his tax evasion scheme to transfer property deeds to the "private church" called the Order of Tranquility. Additionally, Gauruder must pay $409,685 to the IRS. Gauruder's wife was also indicted for tax evasion, but she received 36 months probation as her sentence.

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These types of tax fraud cases usually center around the improper use of a "corporation sole." From the Internal Revenue Service's "The Truth About Frivolous Tax Arguments":

Advocates of this idea believe they can reduce their federal tax liability by taking the position that the taxpayer's income belongs to a "corporation sole" (these have also been referred to as "ministerial trusts"), an entity created for the purpose of avoiding taxes. A valid corporation sole is a corporate form that enables religious leaders to hold property and conduct business for the religious entity. Participants in this scheme apply for incorporation under the pretext of being an official of a church or other religious organization. Participants contend that their income is exempt from taxation because the income allegedly belongs to the corporation sole, which is claimed to be a tax exempt organization described in section 501(c)(3).

While a legitimate corporation sole will enable a bona fide religious leader to incorporate under state law, taxpayers cannot avoid income tax or other financial responsibilities by purporting to be a religious leader and forming a corporation sole for tax avoidance purposes. Courts have repeatedly rejected similar arguments as frivolous, imposed penalties for making such arguments, and upheld criminal tax evasion convictions against those making or promoting the use of such arguments.

Regardless, there are still an abundance of these scams being promoted by "tax professionals." Be careful in participating in such schemes as you may get the opportunity to sit in a jail cell to consider the frivolous of your corporation sole.


Additional Resources
"Utah Man Gets Prison for Tax Evasion Church Scheme," The Salt Lake Tribune, December 21, 2010
IRS Bulletin on "Corporation Sole"
"The Truth About Frivolous Tax Arguments," Internal Revenue Service

2 Maryville Tennessee Pain Clinic Operators Indicted

December 15, 2010, by The McKellar Law Firm, PLLC

The federal government is continuing its crackdown on doctors and operators of pain clinics, with the most recent example being the arrest yesterday of five operators and employees of two Maryville, Tennessee pain clinics. The defendants were charged with conspiracy to distribute controlled substances, conspiracy to commit money laundering and structuring cash transactions to avoid federal transaction reporting requirements, according to the U.S. Attorney's Office for the Eastern District of Tennessee.

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Each defendant faces a potential term of imprisonment of up to 20 years in prison. They also face fines and forfeiture damages in excess of $1 million and criminal forfeiture as alleged in the indictments.

The U.S. Attorney's Office says that the indictment is the result of a 13-month investigation by the Fifth Judicial Drug Task Force, a Drug Enforcement Administration Task Force, and the Internal Revenue Service-Criminal Investigations (IRS-CI).

People who are unfamiliar with health care fraud cases may be surprised to see that the Internal Revenue Service is involved in the investigation. However, it is more of the rule than the exception to have the IRS involved due to the likelihood of failure to report income and violation of tax structuring laws. Christopher R. Pikelis, Special Agent in Charge of the IRS-CI in Nashville, Tennessee says, "The Internal Revenue Service plays a very unique role in this fight, focusing on the illegal financial activities of the individuals and entities involved with these criminal acts. We are committed to investigating financial fraud and taking away the profits from, and assets used to commit, these crimes."

My advice to anyone running a pain clinic and fearing a possible government investigation is to contact an experienced health care fraud lawyer immediately. As this case illustrates, the Government had been investigating this matter for over a year before any arrest had been made. Having a defense team protecting your rights throughout the investigation is critical and may ultimately determine your chances of successfully defending any charges that may be brought against you.

Additional Resources
Press Release, "Operators and Employees of Two Maryville Pain Clinics Arrested," U.S. Attorney's Office, December 14, 2010
BreakthroughPainIndictment.pdf

Tennessee Engineers Found Guilty of Stealing Trade Secrets

December 11, 2010, by The McKellar Law Firm, PLLC

A federal jury in Knoxville, Tennessee has found two Greenback, Tennessee engineers guilty of stealing and making use of trade secrets. Clark Alan Roberts and Sean Edward Howley were found guilty on all counts, including charges of conspiracy, theft and attempted theft of trade secrets, and wire fraud. Sentencing is scheduled for April 14, 2010.

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According to an article by Ed Marcum with the Knoxville News Sentinel, federal prosecutors argued that Roberts and Howley, who worked for Greenback-based Wyko Tire Technology Inc., faced a tight deadline to produce tire-making machinery for a Chinese company that wanted to make a certain specialized type of over-sized tires, which Wyko had not previously made. However, prosecutors contended that Goodyear, for which Wyko was a supplier, had developed such machinery. Prosecutors claimed that the defendants made a visit to a Goodyear plant Kansas in May 2007 so that defendant Howley could secretly use a cell phone camera to photograph such a machine.

Violations of federal trade secrets law fall under the guise of The Economic Espionage Act of 1996, which is codified at 18 U.S.C. Sections 1831 and 1832. To be found guilty of violating Section 1832 of the Economic Espionage Act, the Government must prove beyond a reasonable doubt that:
(1) the defendant stole, or without the owner's authorization obtained, sent, destroyed, or conveyed information;
(2) the defendant knew or believed that the information was a trade secret;
(3) the information was in fact a trade secret;
(4) the defendant intended to convert the trade secret to the economic benefit of somebody other than the owner;
(5) the defendant knew or intended that the owner of the trade secret would be injured; and (6) the trade secret was related to, or was included in, a product that was produced or placed in interstate or foreign commerce.

A defendant is also prohibited from attempting to steal a trade secret, or to receive, purchase, destroy, or possess a trade secret which the defendant knew was stolen. 18 U.S.C. §§1832(a)(2) - (4).

Additional Resources
"Jury Finds Two Greenback Engineers Guilty," Knoxnews.com, December 10, 2010
Dept. of Justice Press Release, December 9, 2010

"Safety Valve" Allows Defendants to Escape Minimum Mandatory Sentences

December 8, 2010, by The McKellar Law Firm, PLLC

Federal criminal defense lawyers should be well aware of the so-called "Safety Valve" provisions of 18 U.S.C. § 3553(f) and United States Sentencing Guidelines § 5C1.2. The Safety Valve allows a defendant who qualifies to receive a sentence below a statutory minimum sentence. However, the Safety Valve only applies in limited situations.

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To be eligible for Safety Valve, a defendant must:
1. be convicted of an offense under 21 U.S.C. §§ 841, 844, 846, 960, or 963;
2. not have more than 1 criminal history point;
3. not have used violence or guns;
4. not have been involved in an offense that resulted in death or serious injury;
5. not have been an organizer, leader, manager, or supervisor of others or have been involved in a "continuing criminal enterprise," as defined in 21 U.S.C. § 848; and
6. by sentencing have provided government with truthful information about offense and related conduct.

Continue reading ""Safety Valve" Allows Defendants to Escape Minimum Mandatory Sentences" »

Tennessee Doctor Indicted for Illegally Prescribing Controlled Substances

December 1, 2010, by The McKellar Law Firm, PLLC

Earlier this week, a Tennessee federal grand jury issued an 85-count indictment against Chattanooga area doctor Richard Adler for allegedly illegally prescribing controlled substances. The 69-year-old doctor appeared in Court on Monday for his initial appearance and entered a plea of not guilty to all charges.

The Department of Justice Press Release states:

The indictment alleges that Dr. Adler knowingly and intentionally dispensed, and cause to be dispensed, quantities of controlled substances, outside the scope of professional practice and not for a legitimate medical purpose. Among the controlled substances alleged to have been illegally prescribed are Oxycontin, Hydrocodone, Methadone, and Endocet. The indictment further alleges that Dr. Adler knowingly and intentionally dispensed, and cause to be dispensed, outside the scope of professional practice and not for a legitimate medical purpose, Oxycodone, that resulted in the deaths of two patients.

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As one might expect, whenever a death results from an improper prescription for a controlled substance, the penalties are severe. In this particular case, both counts alleging that death resulted from the illegal dispensing of a controlled substance (Oxycodone) carry a minimum penalty of 20 years to life in prison.

The core issue in most of these illegal prescription cases is whether the doctor acted within the scope of professional conduct and whether the prescriptions were given to the patient for a legitimate medical purpose. Oftentimes, experts (who are typically practicing medical doctors) will be required to give expert opinion on the legitimacy of the doctor's actions. Accordingly, if you are a doctor facing a potential government investigation of your medical practice, you should contact a health care fraud attorney immediately and secure outside professionals to evaluate the legitimacy your practice and your methods for issuing prescriptions.


Additional Resources
Department of Justice Press Release, Eastern District of Tennessee, November 29, 2010