Staab Agency Case Study

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Court case Brief: United States of America, Appellee, v. Shirley ST. PIERRE, Defendant, Appellant. No. 09-1237, March 17, 2010 FACTS: The Staab Agency (“Staab”) acts as an agent for out-of-state trucking companies seeking to register trailers in Maine. Shirley St. Pierre owned all of Staab after purchasing it from its previous owner in 1991. Under her guidance, the company prospered, growing from approximately four employees and 4,000 customers in 1991 to 17 employees and 37,500 customers in 2002. St. Pierre regularly used company income to pay personal bills and for other personal purposes-not objectionable so long as she reported the income on pertinent tax returns. The IRS randomly audited Staab's fiscal year 2000 returns in March…show more content…
Pierre had regularly used payments, owed to Staab for trailer registration work, for her personal expenses and without depositing them in Staab's account or otherwise disclosing them to her accountants. The government pointed to diversion of such funds to 10 different St. Pierre accounts and the depositing or diversion of over 3,000 company checks without recording them as company income or paying personal taxes upon them. Records indicated unreported income of $1,248,327 for the three-year period; the taxes avoided by the failure to report this income amounted to over $500,000, apart from interest. The complexities of the tax code have led the Supreme Court to require for tax evasion a consciousness of wrongdoing. Cheek v. United States, 498 U.S. 192, 201 (1991) (“voluntary, intentional violation of a known legal duty”). St. Pierre conceded that she had under-reported income but urged that she lacked the requisite state of mind, arguing that she was financially unsophisticated and had relied on her accountants to capture income; as for the allegedly doctored documents, she said she had merely followed instructions from her lawyer. St. Pierre also told the jury about her background, which included early hardship, and her hard work with much personal…show more content…
Although the unpaid taxes for 2000 and 2001 were also substantial, the government suggests that the jury may have given St. Pierre the benefit of the doubt as to her understanding of her obligations prior to 2002. By the time she signed her 2002 return, a tax audit was underway and St. Pierre had told IRS auditors that she understood her obligation to report company income. 2. See United States v. Chesson, 933 F.2d 298, 305 (5th Cir.1991)(“[W]here a defendant attributes underpayment of taxes to his accountant's failure to discover and rectify improper expenses, the question of willfulness is not removed from jury consideration.”); accord United States v. Olbres, 61 F.3d 967, 970-71 (1st Cir.1995). 3. St. Louis testified that while he had told his manager “there ha [d] been unreasonable delays on Mr. Hallee's part” in responding to the audit, he had refused to sign a letter formally accusing Hallee of the same. St. Pierre, claiming that this left the jury with the mistaken belief that St. Louis felt positively toward Hallee, wanted to cross-examine St. Louis regarding evidence that St. Louis, when asked by IRS personnel for names of tax preparers that they might investigate for misconduct, had recommended Hallee's firm to them as a possible

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