“The Court has carefully considered the filings of the parties as well as today’s hearing and the court finds for purposes of sentencing these defendants that the Government has failed to carry its burden of proof by a preponderance of the evidence, much less by clear and convincing evidence, that the tax loss exceeds zero.” — The Honorable James A. Teilborg, judge
PHOENIX — It is unusual for a reporter to start a story simply quoting the trial court verbatim, but the ruling is the story. This was the sentencing in U.S. v. Kerr and Quiel following a six-week long trial in Phoenix, where the defendants were charged with income tax crimes and were facing 35 years in prison for international tax conspiracies. The story ends with a finding that the government did not prove beyond a preponderance that a tax debt was due and owing.
Neither the defense, represented by two of America’s top law firms, Mike Quiel by the Minns Firm and Steve Kerr by Kimerer and Derrick, nor the government put their experts on the stand until the trial was over: at sentencing.
The two defendants were charged with conspiring with each other and their lawyer, Chris Rusch, who turned on them, pleaded guilty to conspiracy and testified against them. They were also indicted on two counts of failing to file a form, TDF 90-22.1, which had to do with foreign bank accounts. Finally, they were charged with filing two incorrect tax returns, which totaled five counts against them.
Quiel, represented by the Minns Firm, including lawyers Michael Minns and Ashley Arnett, was found not guilty of conspiracy, and the charges were dismissed on both foreign bank account indictments; but he was found guilty on the two incorrectly prepared tax returns.
Kerr, represented by Kimerer and Derrick, including Michael Kimerer and Rhonda Neff, was also found not guilty of conspiracy but guilty on the other four counts.
The entire case though, was primarily based on the word of their former lawyer, Rusch, whose website was still up as of the date this article was written and who, although suspended by the California State bar after Minns filed a grievance against him, still lectured on tax law in San Antonio as recently as September.
Theoretically, because of the conspiracy, Rusch was allowed to testify against his own clients, violating sacred attorney-client privilege about the Swiss accounts he set up. Further, he received immunity for other crimes he committed, which ranged from felonies involving these very accounts, to even notary fraud.
So how is this possible? Rusch swore they were all guilty of conspiring, yet his clients were found not guilty of conspiracy. So should he have been allowed to testify against them at all?
Rusch advertises as an expert in criminal tax work but fails to tell his prospective clients his only tax trial was as a criminal defendant — and his only time in front of a criminal tax jury was to snitch on his own clients for taking his advice.
Stay tuned. The 9th U.S. Circuit Court of Appeals will have to decide if a client can go to jail based on testimony from his own lawyer who made a deal with the government to save himself.
With two tax returns admittedly wrong (the government claims intentionally; the defense says they relied on attorney Rusch), the sentencing came down to one big question: Do they owe taxes and, if so, how much?
The large tax claimed by the government would require a sentencing of at least 51 months, but as much as 72 months — far less than the 35 years they started with, but still a huge hardship to the accused and their families.
The government’s argument rested on the testimony of Internal Revenue Service agent Deborah Saparata, who claimed taxes were owed in the millions of dollars.
Under Minns’ cross-examination, Saparata admitted she was not a certified public accountant, had never taken a test for any tax license, was not qualified to do banking taxation (this case dealt with Swiss banks), had not seen the stock certificate the IRS case was based on, and had not given credit for money the lawyer, Rusch, had stolen.
Following her, Kimerer put on the stand Sheri Betzer, a licensed and qualified CPA, who testified that Kerr owed no taxes. Minns then put on the stand Ron Braver, also a licensed and qualified CPA with a master’s degree in tax, who testified Quiel owed no taxes. Minns also showed the court the government’s own computer record, which showed Quiel owed no taxes.
Prosecutor Monica B. Edelstein cross-examined Braver.
Prosecutor Timothy Stockwell cross-examined Betzer.
While this reporter was not surprised by the only reasonable decision, that the government had not proven either defendant owed a tax, Edelstein and Stockwell appeared surprised. A short two weeks later, they served notice that the government was appealing the sentence.
Notice is hereby given that the United States of America appeals to the United States Court of Appeals for the Ninth Circuit the sentence imposed in the court’s judgment entered on September 25, 2013.
— Submitted by John Leonardo, U.S. Attorney Arizona, Timothy Stockwell and Monica B. Edelstein
The next day, Oct. 10, they filed a joint motion with the crooked lawyer, Rusch, to postpone sentencing him for the fourth time. Why is Rusch permitted to continue to sell his services as a confessed criminal? Is the government involved in some sort of conspiracy with Rusch? We notice Rusch does not offer his “services” to “testify” against his own clients.
The court found against the defendants in favor of the government on only one key issue, that the Swiss accounts and multiple corporations were sophisticated.
The court’s findings lowered the possible sentence from 35 years to a minimum of 10 months and a maximum of 16 months.
The court ordered the minimum 10 months but also ordered no imprisonment until the 9th U.S. Circuit Court of Appeals rules on the case.
Presumably, the 9th U.S. Circuit Court of Appeals will decide if this lawyer, Rusch, had the right to testify against his clients and if the government had the right to use his testimony against his own clients for an immunity deal. If a crooked lawyer can trade his clients for his own personal deal with the government, the U.S. Constitution is in jeopardy. The US~Observer can think of no better team to defend the Constitutional right to counsel than the Minns Firm and Kimerer and Derrick.
This reporter also hopes the appellate court will examine the reasonableness of sending someone to trial in a tax case when the citizen likely does not owe a tax.
For now, both of the accused remain free pending this important appeal.
Rusch continues, without government interference, to solicit business as a tax attorney and is reportedly set to lecture in November in Panama for the organization known as Live and Invest Overseas. If this is taking place with the permission of the Federal government, is the government using this as an opportunity to raid the clients of Rusch and the clients of Live and Invest Overseas, perhaps with Rusch working with them on the inside? Do the owners of Live and Invest Overseas know they are sponsoring a convicted felon who testified under oath against his own clients? Do the people meeting with them in Panama next month know they are being taught taxation by an IRS snitch?
Time will tell.
— Ron Lee