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United States v. Rankin

United States Court of Appeals, Sixth Circuit

July 12, 2019

United States of America, Plaintiff-Appellee,
v.
John Anderson Rankin, Defendant-Appellant.

          Argued: May 2, 2019

          Appeal from the United States District Court for the Southern District of Ohio at Columbus. No. 2:15-cr-00168-1-Edmund A. Sargus Jr., District Judge.

         ARGUED:

          Keith A. Yeazel, KEITH A. YEAZEL LAW OFFICE, Columbus, Ohio, for Appellant.

          Noah Litton, UNITED STATES ATTORNEY'S OFFICE, Columbus, Ohio, for Appellee.

         ON BRIEF:

          Keith A. Yeazel, KEITH A. YEAZEL LAW OFFICE, Columbus, Ohio, for Appellant.

          Daniel A. Brown, UNITED STATES ATTORNEY'S OFFICE, COLUMBUS, Ohio, for Appellee.

          Before: MOORE, SUTTON, and MURPHY, Circuit Judges

          OPINION

          KAREN NELSON MOORE, Circuit Judge

         Defendant John Rankin knowingly violated several tax laws in operating his companies, including by failing to turn over to the IRS employees' withholding taxes and inaccurately reporting his own earnings. The IRS investigated

         Rankin and his businesses, first civilly and then criminally. Rankin interfered with and delayed the investigations. He was charged with and convicted of seventeen tax-related counts, sentenced to sixty months in prison, and required to pay a sizable restitution. We AFFIRM his conviction and sentence but modify his judgment to reflect that he need not pay restitution until his term of supervised release commences.

         I. BACKGROUND

         Rankin owned Connectivity Systems, Inc. ("CSI"), a software development and management business, a restaurant called Tuscan Table, and an umbrella organization called Rankin Enterprises, LLC. R. 179 (Trial Tr. at 205-06) (Page ID #4023-24). For years, Rankin failed to pay employee payroll withholdings to the IRS, and he disbursed money from CSI to himself and his other companies as "tangible wages" and "research and development" compensation without reporting it as wages. Id. at 206-21 (Page ID #4024-39); R. 181 (Trial Tr. at 213-220) (Page ID #4522-29).

         Rankin's tax practices were first scrutinized in 2004 by Rea & Associates, a private auditing firm hired by banks that had been lending to Rankin. R. 179 (Trial Tr. at 204-05) (Page ID #4022-23). The audits uncovered that Rankin had been disbursing CSI funds to himself and Rankin Enterprises, classifying them as "royalties" or "research and development," and failing to report them as wages to the IRS. Id. at 218 (Page ID #4036); R. 178 (Trial Tr. at 42-43, 112-29, 140-42) (Page ID #3626-27, 3696-3713, 3724-26). Rankin admitted to the Rea auditors that the payments were employee compensation, not royalties. R. 178 (Trial Tr. at 142) (Page ID #3726).

         The IRS initiated a civil investigation into Rankin's businesses' unpaid tax liabilities and unfiled tax returns in 2008 and contacted Rankin to inquire about them. R. 181 (Trial Tr. at 95- 96, 100-03) (Page ID #4404-05, 4409-12). He continued to fail to file tax returns for his businesses and proved uncooperative in the IRS investigation. When an IRS investigator informed Rankin that she planned to file a notice of tax lien, he responded that he would make a payment every day so that it would be difficult for the IRS to know the balance owed and file the lien. Id. at 115-16, 118, 122 (Page ID #4424-25, 4427, 4431). Rankin also claimed that a fire had destroyed some financial records, leading to the delay in his tax payments. Id. at 156 (Page ID #4465). Evidence presented at trial suggested that the fire had not in fact encumbered his ability to access the financial records or satisfy his tax obligations. Id. at 156, 158-59 (Page ID #4465, 4467-68); R. 179 (Trial Tr. at 203-04) (Page ID #4021-22). For example, the jury saw a letter that Rankin had written to CSI employees bragging about his efforts to beat the IRS at its own game, R. 190 (Exhibit at 3-6) (Page ID #5769-72), and a special agent who worked on the case testified that the records were readily available elsewhere. R. 182 (Trial Tr. at 208-09) (Page ID #4778-79).

         The IRS eventually initiated a criminal investigation into Rankin's tax activities. Rankin was informed in person by an IRS officer that he was under investigation in April 2011. R. 181 (Trial Tr. at 231-33) (Page ID #4540-42). In May 2011, Rankin filed five amended individual income tax returns for the years 2005 through 2009. These tax returns falsely declared negative adjusted gross income and no federal tax due. Rankin achieved this outcome by declaring some previously undisclosed income and claiming suspicious new offsets to which he was not entitled. See, e.g., R. 182 (Trial Tr. at 32-35) (Page ID #4602-4605).

         On July 7, 2015 Rankin was charged with seven counts of failure to account for and pay over withholding, FICA, and Medicare taxes involving Rankin Enterprises and Tuscan Table in violation of 26 U.S.C. § 7202, six counts of subscription of false individual income tax returns in violation of 26 U.S.C. § 7206(1), three counts of subscription of false CSI income tax returns in violation of the same statute, and one count of corruptly endeavoring to obstruct the due administration of the Internal Revenue laws in violation of 26 U.S.C. § 7212(a). R. 1 (Indictment at 1-5) (Page ID #1-5).

         Rankin moved to dismiss Count 17 of the indictment, which charged him with corruptly endeavoring to obstruct the due administration of the tax laws in violation of 26 U.S.C. § 7212(a). R. 50 (Mot. to Dismiss Count 17 of Indictment) (Page ID #1249). Count 17 alleged that "[f]rom on or about January 1, 2005, through the date of the filing of this Indictment [on July 7, 2015]" Rankin had "willfully misl[ed] agents of the IRS by making false and misleading statements to those agents and by concealing information sought by those agents who he well knew were attempting to ascertain income, expenses and taxes for [Rankin] and his various business entities and interests." R. 1 (Indictment at 5) (Page ID #5). Rankin argued that this language was vague, mostly parroted the language of the statute without adding factual detail, and encompassed an approximately ten-year period without highlighting specific instances of misconduct. See R. 50 (Mot. to Dismiss Count 17 of Indictment at 5) (Page ID #1253). He further argued that the language of Count 17 was so vague that it was impossible to tell whether the challenged conduct was already covered by one of the other counts in the indictment, violating the Double Jeopardy Clause. Id.

         The district court ordered the government to respond to Rankin's motion either with a memorandum or with a bill of particulars. R. 89 (Jul. 13, 2017 Order at 3) (Page ID #1624). The government responded with a memorandum arguing that Rankin had been provided the relevant evidence supporting Count 17 in discovery and highlighting particular examples of occasions on which he had violated the statute. R. 93 (Mem. Contra Mot. to Dismiss Count 17) (Page ID #1640). The government also provided Rankin with a draft exhibit list including evidence it intended to introduce at trial. It argued that the ...


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