Skip to Content

Conspiracy charges are some of the toughest to fight. The criteria are easier for the government to prove and the consequences can be severe. Loss of freedom and large fines are at stake. This is why anybody who is being investigated for or questioned about a tax discrepancy should seek counsel immediately.

Fort Worth tax conspiracy defense law firm Brown, PC is a top tax litigation and white collar criminal defense firm that handles the most high-profile IRS cases. We represent businesses and individuals who are accused of tax fraud and conspiracy. The firm’s founder, attorney Lawrence Brown, is a former prosecutor with the DOJ Tax Division. He and his team have successfully defended clients in some of the most complex tax fraud conspiracy cases ever pursued by the government.

Elements of a § 371 Offense

The government often charges conspiracy when there is more than one person involved in a fraud-related crime. In many cases, both conspiracy and the substantive crimes are charged, which gives the government multiple opportunities to convict in the same case. Furthermore, the government may charge multiple acts as separate conspiracies, rather than under the umbrella of a single conspiracy, substantially raising the stakes.

To convict under § 371, the government must prove beyond a reasonable doubt that:

  • Two or more persons agreed to defraud or commit an offense against the United States.
  • The defendants knowingly and voluntarily participated in the conspiracy.
  • A participant committed an overt act in furtherance of the conspiracy.

What is an Agreement Under § 371?

The basis for a conspiracy charge is the agreement. Successful completion of a crime is not necessary to be convicted under § 371. However, the defendant can be charged with both conspiracy and the substantive offense for which the conspiracy was formed.

The agreement may be implicit and loosely formed rather than expressly communicated in writing or fully detailed. This broad interpretation of an agreement may be proven circumstantially or through the actions and statements that infer the parties agreed to the scheme.

The agreement requires more than one person. But, a person may still be indicted even if no other co-conspirator is named. Therefore, a conspiracy with oneself is a legal impossibility, but the government may nonetheless charge a single person with the conspiracy. The conspiracy may not involve one person agreeing with undercover agents because no agreement has been formed in this situation. At least two other people besides the undercover law enforcement officer are required. One or more of the participants may be a corporation, and the conspiracy may revolve around an agreement made by the corporation with its employee.

Knowingly and Voluntarily Joining a Conspiracy

A party cannot accidentally join a conspiracy. The participation must be knowing and voluntary. In other words, the defendant must have known of the conspiracy’s existence and intentionally joined it in order to accomplish its objectives. This does not mean the defendant must know all the details of the scheme or all the other participants. A minor player in the scheme may nonetheless be considered a conspirator as long as the participant understands the essential nature of the conspiracy and purposely chooses to join.

In fact, the government may prevail by proving beyond a reasonable doubt a slight connection to the conspiracy.  However, the government must show more than mere presence at the scene of the transaction or association with the other conspirators. Likewise, mere knowledge that an illegal transaction is occurring is not enough.

Under the Pinkerton Liability theory, each conspirator is responsible for the offenses of the others committed in furtherance of the conspiracy while the conspirator was a member. This theory holds true even if the defendant did not agree to commission of the crime or know about it. The government has sometimes held a defendant liable for crimes committed prior to the defendant’s involvement in the conspiracy.

What is an Overt Act?

An agreement with nothing more is not a conspiracy. The defendant must have also committed an overt act in furtherance of the conspiracy’s objectives. This element is intended to demonstrate that the conspiracy is in play and not just an idea. Therefore, the overt act must occur before the objective of the conspiracy is accomplished. The overt act is irrelevant to a conspiracy that is over. In addition, the overt act may itself be legal as long as it shows the conspiracy is in process. In the context of tax fraud, the overt act is often concealment of income or expenses.

Forms and Scope of Tax Fraud Conspiracy

A conspiracy falls under two main categories. Violation of the offense clause occurs when the defendant conspires to commit a crime defined by federal statute. Violation of the defraud clause is a conspiracy to defraud the United States. This distinction becomes crucial at the indictment stage because the government must refer to the statute in an offense clause crime, but not in a defraud clause allegation.

The scope of defrauding under § 371 is much broader than in other statutes. A Supreme Court decision defined the scope of defraud clause conspiracy as either to “cheat the government out of money or property,” or to “interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest.”

The government can charge defraud clause conspiracy even if the conspiracy failed and the government sustained no losses or was otherwise not harmed. That the conspirators interfered with the IRS’s functions by any dishonest means is enough.

The application of § 371 to a tax defraud clause conspiracy is referred to as a Klein Conspiracy, which refers to the Supreme Court decision, United States v. Klein. The Klein case named 20 acts of concealment that would be considered a conspiracy to defraud the IRS, including altering the books to conceal dividend liquidation as commissions, disguising a gratuitous payment as loan reimbursement, and making false entries in regard to the taxpayer’s personal income, corporate profits and stock transactions.

Let Our Fort Worth Tax Conspiracy Defense Law Firm Help With Your Defense

Take immediate action to protect your rights if you have been questioned about a tax fraud conspiracy. Brown, PC, a tax conspiracy defense law firm, works tirelessly to defend you against conspiracy and substantive fraud charges.

Related Success Stories

See All Stories

Related Insights

See All Insights