Brown, PC is known as one of the premier tax litigation and white collar criminal defense law firms in the country. Our Fort Worth tax crime defense law firm represents taxpayers who have been accused of filing false, fictitious or fraudulent claims. We have successfully represented businesses and individuals in some of the largest and most complex criminal tax cases ever pursued by the government. Founding attorney Lawrence Brown is the go to tax trial lawyer for some of the nation’s most prominent individuals, as well as his fellow professionals.
Elements of 18 U.S.C. § 287 False, Fictitious or Fraudulent Claims
18 U.S.C. § 287 and § 286 apply to a variety of circumstances in which a person or entity defrauds the U.S. government, often including tax fraud schemes. Many of the tax fraud cases involve the filing of multiple fictitious tax returns that claim refunds for taxes the defendant already received or retained.
The government generally has a number of other options for charging the defendant under the same fact scenario, including: 26 U.S.C. §7206(1) and (2) filing false returns, 18 U.S.C. §1001 making false statements, 18 U.S.C. §1341 mail fraud and 18 U.S.C. §1343 wire fraud. The government usually opts to bring the claim under 18 U.S.C. § 287 when the taxpayer kept the refund because of the better availability of restitution.
However, the government may choose to file wire fraud and mail fraud charges for strategic purposes in cases involving multiple false claims. First, the scheme may not satisfy the elements of conspiracy under § 286. Also, the government may be contemplating an asset forfeiture or restitution action against the defendant, in which case, a money laundering charge would be more appropriate.
The government must prove each of the three elements beyond a reasonable doubt:
- The defendant made or submitted a claim for property or money to a U.S. department or agency.
- The claim was false, fictitious or fraudulent.
- The defendant knew about the falsity, fictitiousness or fraudulence of the claim when it was made.
Elements of 18 U.S.C. § 286 Conspiracy to Commit Fraud
The elements of § 286 depend upon the jurisdiction in which the case is brought. The Sixth Circuit has concluded that the elements are:
- The defendant entered a conspiracy against the United States in regard to a payment.
- That claim was false, fictitious or fraudulent.
- The defendant knew or purposely ignored the falsity, fictitiousness or fraudulence of the claim.
- The defendant knew about and chose to join the conspiracy.
- The defendant participated voluntarily.
The Fifth Circuit has held that the prosecution must prove the first three, but declined to hold the remaining elements as necessary. Therefore, the government does not have to prove that the defendant knew about the conspiracy and chose to participate voluntarily.
Penalties for Violating 18 U.S.C. § 287 and § 286
A person who is found guilty of violating § 287 by making or presenting a false claim to any person in the U.S. civil, military or naval services may be sentenced to up to five years of incarceration and fined up to $250,000. A corporation may be ordered to pay up to $500,000 in fines for violating the statute. In the alternative, individuals and corporations may be fined up to twice the gain or loss resulting from the fraudulent conduct.
A person found guilty of a § 286 fraud conspiracy offense may be sentenced to up to 10 years in prison and up to $250,000 in fines. A corporation may be subject to fines up to $500,000 or double the gain or loss.
What is a Claim Against the United States?
The government must prove that the defendant made or submitted a claim for property or money to a U.S. department or agency. The language clearly indicates that the government must receive the claim to meet this first element, but the defendant does not have to directly file the claim. Tax preparers and electronic originators are intermediaries that do not break the liability of the taxpayer.
A taxpayer who pays with a bad check has not submitted a claim under § 287 because no refund payment was possible in those circumstances. Of course, the taxpayer would likely face charges under the False Claim Act instead. Also, a taxpayer may still have filed a claim under § 287 if the government does not honor the claim because financial loss is not an element of this crime.
When is the Claim Deemed False, Fictitious or Fraudulent?
Was the claim true when made? This is the crucial question to prove that the claim was false and fictitious. To prove fraud, the question is whether the defendant knew the claim was untrue at the time it was made or caused to be made. The defendant’s entitlement to a refund is irrelevant, so a defendant who would have received a refund based upon a correctly-filed return may nonetheless be charged under § 286 or § 287.
Unlike other statutes, § 286 and § 287 do not require materiality of the allegedly untrue matter. Because materiality is not an element of these offenses, virtually any untrue claim filed with the government may give rise to charges.
Knowledge and Willfulness
Knowledge is an element of the crime, but willfulness is not. Therefore, the government must prove that the defendant knew the claim was false at the time it was presented to the government. The government does not have to prove that the defendant acted willfully in presenting the untrue claim.
Common Scenarios that Lead to § 286 and § 287 Charges
Most false tax fraud schemes involve filing false W-2 forms. The taxpayer may file multiple false returns claiming tax refunds. The W-2 may contain withholdings in excess of tax liability or show fictitious employer names and EINs. The conspirators may file tax returns using numerous names and Social Security numbers of people who are unlikely to file, or they may simply create fictitious data.
Learn More From Our Fort Worth Tax Crime Defense Law Firm
If you have been accused of making a false, fictitious or fraudulent claim for property or money to a U.S. department or agency, you should obtain experienced counsel immediately. Tax crime defense law firm Brown, PC will vigorously challenge the government’s case and raise your strongest defense.