United States Attorney Requests Leave for Dismissal of Criminal Tax Evasion Charges Against John and Timothy Rigas
The United States Attorney's Office for the Middle District of Pennsylvania announced the filing of a motion for leave to dismiss the criminal tax evasion charges pending against John Rigas and Timothy Rigas in the Middle District of Pennsylvania following the dismissal of a related tax fraud conspiracy charge on double jeopardy grounds.
On January 18, 2012, United States District Judge John E. Jones III granted the Rigases' motion to dismiss the tax fraud conspiracy charge based upon a decision in 2010 by the United States Court of Appeals for the Third Circuit. The Court of Appeals ruled that the Rigases had raised a strong inference under the totality of circumstances that the tax fraud conspiracy was factually identical to the bank and securities fraud charge for which the Rigases were convicted in the Southern District of New York in July 2004.
As a result of their convictions in New York for conspiracy, securities fraud, false statements, and bank fraud, John Rigas, age 86, is presently serving a sentence of 12 years in prison, and Timothy Rigas, age 55, is now serving a prison term of 17 years.
As stated in the motion for leave to dismiss the remaining tax evasion charges, following the rulings by the Third Circuit and the district court on the tax conspiracy charge, the United States Attorney and the Tax Division of the Department of Justice undertook a re-evaluation of whether the federal interest in this criminal tax prosecution was substantial enough to support the continuation of the case.
In conducting that re-evaluation, the United States Attorney and the Tax Division, in accordance with U.S. Department of Justice policies, considered federal law enforcement priorities, the nature and seriousness of the pending criminal tax offenses, the potential deterrent effect of this prosecution, the culpability of the defendants, their criminal histories, and the probable sentence or other consequences of conviction, including the likelihood of significant additional imprisonment, payment of restitution for tax losses, and the availability of civil enforcement remedies.
The United States Attorney's Office stated in the motion that, while sufficient evidence exists to obtain a conviction on the remaining tax evasion counts, the convictions likely will not result in substantial, additional prison time for the offenses and there will be significant limits on the imposition and collection of restitution.
Under applicable federal laws,, restitution for the criminal tax evasion counts is available only as a condition of supervised release following a term of imprisonment. John Rigas' projected release date on his 15-year sentence is January 23, 2018. Timothy Rigas' projected release date is June 23, 2022, upon completion of his 17-year sentence. Based upon the lengthy prison terms presently being served by John Rigas and Timothy Rigas, any recovery of restitution could not occur until the defendants are released from prison and placed on supervised release.
In the motion, the United States Attorney's Office noted that the IRS has pending administrative proceedings and other available remedies to assess and collect the substantial tax deficiencies resulting from the diversion of corporate assets by the Rigases to entities under their control and from the tax fraud and evasion alleged in the Superseding Indictment.
According to the motion, the United States Attorney and the Tax Division have consulted with IRS Criminal Investigations and that agency concurs in the conclusion that the tax evasion violations alleged in the Superseding Indictment are better addressed through administrative and civil remedies available to the IRS and that in the absence of a substantial federal interest further prosecution will not be a prudent expenditure of limited prosecutorial resources.
United States Attorney Peter J. Smith stated that the motion to dismiss filed today by the Government in no way minimizes the seriousness of the fraudulent acts of the defendants as set out in the federal prosecution in New York. Nor does it free them from the enforcement authority of the IRS to recover taxes that are due.
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