Describing the tax returns as “patently false and utterly groundless,” the 7th Circuit Court of Appeals kicked aside a defendant’s argument that he believed the government owed him $900,000.
Eugene Clarke, also known as Imhotep Bey and Eugene Clarke Jr., was convicted of seven counts of filing a false claim with the United States in violation of 18 U.S.C. 287.
His scheme began when he submitted federal tax returns for the Eugene Clarke Trust for tax years 2006, 2007 and 2008. Each return claimed the trust had received $900,000 in income and that $300,000 had been withheld in federal taxes.
As the 7th Circuit noted, “Astonishingly the (Internal Revenue Service) processed all three returns and mailed Clarke three $300,000 checks on Jan. 5, 2010.” Within months of depositing the checks, Clarke spent all the money. Three years later, he was charged and found guilty at trial.
Before the 7th Circuit, Clarke contended the government did not prove he violated 18 U.S.C. 287. The federal government did not offer evidence that he knew his claim was false.
The 7th Circuit pointed to United States v. Ferguson, 793 F.2d 828, 831 (7th Cir. 1986) and held the government did not need to prove willfulness but only had to show Clarke knew the claim was false.
On that point, the panel found the government had presented sufficient evidence. The returns listed $900,000 in income without identifying how this income was obtained. Also, the returns claimed a withholding of $300,000 but no such funds were ever withheld.
“Because the information on Clarke’s tax returns was ‘patently false and utterly groundless,’ Clarke’s forms provide sufficient evidence for a jury to conclude Clarke knew the falsity of his claims,” Judge William Bauer wrote in United States of America v. Eugene Clarke, 14-3515.