In a decision dated August 27, 2010, the Second Circuit vacated a $6 million fine imposed on John Larson, former Senior Tax Manager of KPMG LLP, in connection with his role in the design, implementation, and marketing of fraudulent tax shelters. Larson was convicted of twelve counts of tax evasion in December 2008 and, in addition to his fine, was sentenced to prison.
Under 18 U.S.C. § 3571(b), the maximum fine for a felony is $250,000, but Section 3571(d) permits an alternative fine based on "gain or loss" and authorizes a district court to impose a fine of not more than twice the gross pecuniary loss caused by, or gain derived from, a defendant's offenses. Although the jury did not make any finding regarding the amount of pecuniary loss caused, or gain derived, by Larson through his crimes, the trial court nonetheless relied on Section 3571(d) in imposing Larson's $6 million fine.
The Second Circuit reversed and remanded the fine. Citing Apprendi v. New Jersey, 530 U.S. 466 (2000), the court found that in the absence of a jury finding, the $6 million fine constituted plain error. The court did not consider Larson's convictions or term of imprisonment. Opinion.