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Stanley Needleman Guilty Plea

Stanley Needleman Guilty Plea

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Published by: citypaper on Sep 01, 2011
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of Justice

United States Attorney District o/Maryland Northern Division
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via email attachment
July 25, 2011

William H. -Murph.y, Esquire
Kenneth W. Ravenell; Esquire

The Murphy Finn One South Street, 23rd Floor
Baltimore, 'Maryland 21202


United States v. Stanley Needleman.

Dear Messrs. Murphy and Ravenell: This letter, together with the Sealed Supplement, confirms the plea agreement which has been offered to Stanley Needleman, the Defendant, by the United States Attorney's Office' for the District of Maryland ("this-Office"). If the Defendantaccepts this offer, please have him execute it in the spaces -. rovided below. If this offer has not been accepted by July 26, 2011, it will be deemed p withdrawn.. The tenus of the 'agreement ate as follows: Offense of Conviction The Defendant agrees to waive prosecution by indictment pursuant to Federal Rule of Crimi rial Procedure 7(b) and to plead guilty to the following two counts of the Cfiminal Information: Count One, charging. tax evasion in violation of26 U.s..C. -§ 720l, and Count.Two, chargingstmcturitig of financlaltransactionsin violation of31 U.S.C. §§ 5324(a)(3) and (d)(2). The Defendant admits that hels, in fact, guilty of these offenses and will so advise the Court, I.

Elements of the Offenses
? The elements of the offenses to which the Defendant has agreed to plead guilty~ and which this .office would prove if the-case went to trial. are asfollows:

Count One - Tax Evasion a. The Defendant owed substantially more federal Income tax. for the calendar year 2009 thenwhat he· declared on the Income tax return. 'he filed for that



The Defendant committed an affirmative act to evade the payment of taxes owed for calendar year 2009.
The Defendant acted willfully.

Count Two - Structuring of Financial Transactions
a b. The Defendant acted lmowingly to structure a currency transaction. The Defendant knew that the financial institution involved had a legal obligation to report transactions in excess of $1 0,000.

c. d.

The purpose of the structured transaction was to evade the reporting obligation. The structured transaction was part of a pattern of illegal activity involving more than $100,000 in a 12-month period.

Defendant is pleading guilty are as follows: Count One, tax evasion, carries a maximum sentence


The maximum sentence provided by statute for the offenses to which the

of imprisonment of five (5) years, a fine ofSl 00,000, and three (3) years of supervised release; and Count Two, structuring of fmancial transactions, carries a maximum sentence of imprisomnent of ten (10) years, a S5oo,OOO fine, and three (3) of supervised release. In addition. the Defendant must pay S100 per count of conviction as a special assessment pursuant to 18 U.S.C. § 3013, which wiU be due and should be paid at or before the time of sentencing. This Court may also order him to make restitution pursuant to 18 U.S.C. §§ 3663, 3663A, and 3664.1 If a fine or restitution is imposed, it shall be payable immediately, unless, pursuant to 18 U.S.C. § 3572(d), the COUItorders otherwise. The Defendant understands that if he serves a term of imprisonment, is released on supervised release, and then violates the conditions of his supervised release, his supervised release could be revoked - even on the last day of the term - and the Defendant could be returned to custody to serve another period of incarceration and a new tenn of supervised release. The Defendant understands that the Bureau of Prisons has sole discretion in designating the institution at which the
Defendant will serve any term of imprisonment imposed.

1 PW'Suant to 18 U.S.C. § 3612, if the Court imposes a fine in excess of $2,500 that remains unpaid 15 days after it is imposed, the Defendant shall be charged interest on that fine. unless the Court modifies the interest payment in accordance with 18 U.S.C. § 3612(f)(3).


Waiver of Rights

4. The Defendant understands that by entering into this agreement, he surrenders certain rights as outlined below: Ifthe Defendant had persisted in his plea of not guilty, he would have had the right to a speedy jury trial with the close assistance of competent counsel. That trial could a.
be conducted by ajudge,

without a jury, if the Defendant, this Office, and the Court all agreed.

The Defendant has the right to have his case presented to a Grand Jury, which would decide whether there is probable cause to return an indictment against him. By agreeing to proceed by way of Information. he is giving up that right, and understands that the charges will be filed by the United States Attorney without the Grand Jmy. c. If the Defendant elected a jury trial. the jury would be composed of twelve individuals selected from the community. Counsel and the Defendant would have the opportunity to cha11enge prospective jurors who demonstrated bias or who were otherwise unqualified, and would have the opportunity to strike a certain number of jurors peremptorily. All twelve jurors would have to agree unanimously before the Defendant could be found guilty of any count. The jury would be instructed that the Defendant was presumed to be innocent, and that presumption could be overcome only by proof beyond a reasonable doubt.
d. Ifthc Defendant went to trial, the government would have the burden of proving the Defendant guilty beyond a reasonable doubt. The Defendant would have the right to confront and cross-examine the government's witnesses. The Defendant would not have to present any defense witnesses or evidence whatsoever. If the Defendant wanted to call witnesses in his defense, however. he would have the subpoena power of the Court to compel the witnesses to attend.


e. The Defendant would have the right to testify inhis own defense ifhe so chose, and he would have the right to refuse to testify. lfhe chose not to testifY, the Court could instruct the jury that they could not draw any adverse inference from his decision not to testify.

f. lfthe Defendant were found guilty after a trial, he would havethe right to appeal the verdict and the Court's pretrial and trial decisions on the admissibility of evidence to see if any errors were committed which would require a new trial or dismissal of the charges against him. By pleading guilty, the Defendant knowingly gives up the right to appeal the verdict and the
Court's decisions. g. By pleading guilty, the Defendant will be giving up all of these rights, except the right, under the limited circumstances set forth in the uWaiver of Appeal" paragraph below. to appeal the sentence. By pleading guilty, the Defendant understands that he may have to answer the Court's questions both about the rights he is giving up and about the facts of his case. Any statements the Defendant makes during such a hearing would not be admissible against him 3

during a trial except in a criminal proceeding for perjury or false statements. h. lfthe Court accepts the Defendant's plea of guilty, there will be no further trial or proceeding of any kind, and the Court will find him guilty.

valuable civil rights.

By pleading guilty, the Defendant will also be giving up certain
Adyisoty Sentencing Guidelines


S. The Defendant understands that the Court will determine a sentencing guidelines range for tbis case (henceforth the "advisory guidelines range") pursuant to the Sentencing Reform Act of ]984 at 18 U.S.C. §§ 3551-3742 (excepting 18 U.S.C. §§ 3SS3(b)(I) and 3742(e» and 28 U.S.C. §§ 991 through 998. The Defendant further understands that the Court will impose a sentence pursuant to the Sentencing Refonn Act, as excised, and must take into account the advisory guidelines range in establishing a reasonable sentence.
Factual and Adyisory Guidelines Stipulation 6. This Office and the Defendantunderstand, agree and stipulate to the Statement ofFaets set forth in Attac1unent A hereto which this Office would prove beyond a reasonable doubt, and to the following applicable sentencing guidelines factors: a. As to Count One (tax evasion), the total tax loss is more than $400.000, but less than $1,000,000, resulting in a base offense level of twenty (20). pursuant to U.S.S.O. §§ 181.3, 2Tl.l(a)(1) and 2T4.1(H). h. As to Count Two (structuring offmancial transactions), the base offense level is twenty (20) because the amount of funds structured totaled more than $400,000, pursuant to U.s.8.0. §§ 181.3. 281.3(a)(2), 2S1.3(c) and 2Bl.l(b)(1)(H). A two-level upward adjustment is warranted pursuant to U.8.S.G. § 2S1.3(b)(2)(B) because the structuring was part 8 pattern of unlawful activity involving more than $100,000 in a 12~month period, resulting in an offense level of twenty-two (22). c. Because the defendant's tax evasion and structuring offenses involved the same victim and were connected by a common criminal Q bjective or constituted part of a common scheme or plan, they are subject to grouping under § 3D1.2(b). Under § 3D1.3(a), the adjusted offense level for the highest group therefore governs all of the counts of conviction, and the combined adjusted offense level before applying any reductions is twenty-two (22). . d. This Office does not oppose a two-level reduction in the Defendant's adjusted offense level, based upon the Defendant's apparent prompt recognition and affirmative acceptance of personal responsibility for his criminal conduct. This Office agrees to make a motion pursuant 4

to U.S.S.G. § 3El. 1(b) for an additional one-level decrease in recognition of the Defendant's timely notification ofms intention to plead guilty. This Office may oppose any adjustment for acceptance ofresponsibitity if the Defendant (a) fails to admit each and every item in the factual stipulation; (b) denies involvement in the offense; (0) gives conflicting statements about his involvement in the

offense; (d) is untruthful with the Court, this Office, or the United states Probation Office; (e) obstructs or attempts to obstruct justice prior to sentencing; (t) engages in any criminal conduct between the date of this agreement and the date of sentencing; or (g) attempts to withdraw his plea of guilty.

7. The Defendant understands that there is no agreement as to his criminal history or criminal history category, and that his criminal history could alter his offense level ifhe is a career offender or if the instant offense was a part of a pattern. of criminal conduct from whicb he derived a substantial portion of his income.
8. The Office reserves the right to seek a two-level upward adjustment for sophisticated means pursuant to U.S.S,O. § 2T1.1(b)(2). The Defendant reserves the rightto argue against this adjustment. This Office and the Defendant agree that with respect to the calculation of the advisory guidelines range, no other offense characteristics, sentencing guidelines factors or potential adjustments set forth in the United States Sentencing Guidelines will be raised or are in dispute. This Office and the Defendant reserve the right to argue any factor set forth in 18 U.S.C. § 3553(a). This Office will recommend a sentence within the applicable guideline range.

9. The Defendant agrees to the entry of a Restitution Order for the tax losses incurred by the Internal Revenue Service in the amount ofS543,695 and the State of Maryland in the amount of$117,319, for a total ofS661,014. The Defendant agrees that, pursuant to 18 U.S.C. §§ 3663 and 3663A and §§ 3563(b)(2) and 3583(d), the Court may order restitution of the full amount of the actual, total loss caused by the offense conduct set forth in the factual stipulation. The Defendant further agrees that he will fully disclose to the probation officer and to the Court. subject to the penalty of perjury. all information, including but not limited to copies of all relevant bank and financial records, regarding the current location and prior disposition of all funds obtained as a result of the criminal conduct set forth in the factual stipulation. The Defendant further agrees to take all reasonable steps to retrieve or repatriate any such funds and to make them available for restitution. The Defendant agrees to pay the full amount of restitution prior to the date of sentencing. The parties agree that $661.014 of the cash seized from the Defendant's residence on April 14, 2011, will be used to pay the restitution amount. To facilitate the payment, the Defendant consents to the transfer of $661,014 of the seized funds to the appropriate authorities. If the Defendant does not fulfiU this provision, it will be considered a material breach of this plea agreement, and this Office may seek to be relieved of its obligations under this agreement.


Tax Liability
The Defendant understands that this agreement does not resolve any civil tax liability that he may have, and that this agreement is with the United States Attorney's Office, not with the Internal Revenue Service. The Internal Revenue Service is not a party to this agreement and remains free to pursue any and alllawfuJ civil remedies it may have. The Defendant agrees, however, as a special condition of supervised release (a) to execute a final and conclusive "Closing Agreement" with the Internal Revenue Service. pursuant to section 7121 of the Internal Revenue Code, in order to resolve his tax liabilities for the years 2005-2009; (b) to provide a complete and accurate financial statement, under penalty of perjury, to the United states which shall identify all assets valued at $1 000 or more owned or held directly orindireetly by him, as well as all such assets transferred by him to any third parties since 2005, including the location of said assets and identities of the third parties; and (c) to pay to the Internal Revenue Service all additional taxes, interest and penalties which the Internal Revenue Service may determine that he owes for the tax years 20052009. pursuant to the aforesaid Closing Agreement. However, the Defendant reserves the right to contest any civil assessment that the IRS may choose to pursue. The Defendant understands that a failure to comply with any of the conditions of his supervised release ma.y result in revocation of his release conditions. resulting in his incarcemtion for all or part of the tenn of supervised release. The Office will recommend that the Court order restitution in the total amount of taxes owed for years 2005-2009, as more fully set forth in paragraph 9, and will recommend that the restitution be applied against the gross amount determined in the Closing Agreement. Payment of any additional taxes, interest, or penalties as set forth in the Closing Agreement shall payable as a condition of supervised release. Forfeiture 11. The Defendant agrees to forfeit to the United States all of his right, title, and 10.

interest in any and all money, property, or assets of any kind, derived from or acquired as a result of,
or used to facilitate the commission of, the Defendant's illegal structuring of financial transactions, in violation of31 U.S.C. § 5324(a)(3). The Defendant agrees to forfeit $492,646 to the federal government The parties agree that $492,646 of the cash seized from the Defendaat's residence on April 14. 2011, will be used to pay the forfeiture amount. To facilitate the forfeiture payment, the Defendant consents to the transfer of $492,646 of the seized funds to the appropriate authorities. The Defendant agrees to fully assist the United States in the forfeiture of these funds. The Defendant knowingly waives all constitutional, legal and equitable defenses to the forfeiture of the ftmds. Collection of Financial Obligations 12. The Defendant expressly authorizes the U.S. Attorney's Office to obtain a credit report in order to evaluate the Defendant's ability to satisfy any financial obligation imposed by the Court. Inorder to facilitate the collection offinancial obligations to be imposed in connection with this prosecution, the Defendant agrees to disclose fully all assets in which the Defendant has any interest or over which the Defenclantexercises control, directly or indirectly, including those held by a spouse, nominee or other third party. The Defendant will promptly submit a completed financial statement to the United States Attorney's Office, in a fonn this Office prescribes and as 6

it directs. The Defendant promises that the fwancilll statement and disclosures will be complete, accurate and truthful, and understands that any willful falsehood on the financial statement wi11be a separate crime and may be punished under 18 U.S.C. § 1001 by an additional five years' incarceration and fine.

13. of sentencing and to stop the practice of law as of August 24,2011.

frofessional License C(lV\,efd>~ J.eb?.r~A7. The Defendantag;ges fg "B1ImB" c!!!le' 1.n h "J, nse.priorto the date
Qbli~ations of the United States AttorneY's Office

14. The parties reserve the right to bring to the Court's attention at the time of sentencing, and the Court will be entitled to consider, all relevant information concerning the Defendant's background, character and conduct.

I S. Other than the offenses 10 which the Defendant bas agreed to plead guilty, and with the exception of crimes of violence and against children, this Office will not prosecute the Defendant for any other violations of federal criminal law that arise from the facts stipulated bytbe Defendant and this Office, attached hereto and incorporated herein, that form the basis of this plea agreement Waiver of Appeal 16. In exchange for the concessions made by this Office and the Defendant in this plea agreement, this Office and the Defendant waive their rights to appeal as follows:
a, The Defendant knowingly waives all right, pursuant to 28 U.S.C. § 1291 or otherwise, to appeal the Defendant's conviction; h. The Defendant and this Office knowingly waive all right, pursuant to 18 U.S.C. § 3742 or otherwise, to appeal whatever sentence is imposed (including the right to appeal any issues that relate to the establishment of the advisory guidelines range, the detennina1ion of the defendant's criminal history. the weighing of the sentencing factors, and the decision whether to impose and the calculation of any term of imprisonment. fine, order of forfeiture, order of restitution, and term or condition of supervised release). except as follows: (i) the Defendant reserves the right to appeal any term of imprisonment to the extent that it exceeds 51 months' imprisonment; (ii) and this Office reserves the right to appeal any term of imprisonment to the extent that it is below 30 months' imprisomnent. c. Nothing in this agreement shall be construed to prevent the

Defendant or this Office from invoking the provisions of Federal Rule of Criminal Procedure 35(a), or from appealing from any decision thereunder, should a sentence be imposed that resulted from arithmetical, technical, or other clear error.


d. The Defendant waives any and all rights under the Freedom of Infcrmation Act relating to the investigation and prosecution ofth.e above-captioned matter and agrees not to file any request for docwnents from this Office or any investigating agency.
Obstruction or Other YiolatigDs of


17. The Defendant agrees that he will not commit any offense in violation of federal, state or local law between the date of this agreement and his sentencing in this case. In the event that the Defendant (i) engages in conduct after the date of this agreement which would justify a finding of obstruction of justice under U .S.S.G. § 3C 1.1, or (ii) fails to accept personal responsibility for his conduct by failing to acknowledge his guilt to the probation officer who prepares the Presentence Report, or (iii) commits any offense in violation offederal, state or local law, then this Office will be relieved of its obligations to the Defendant as reflected in this agreement. Specifically, this Office will be free to argue sentencing guidelines factors other than those stipulated in this agreement, and it will a1so be free to make sentencing recommendations other than those set out in this agreement. As with any al1eged breach of this agreement, this Office will bear the burden of convincing the Court: of the Defendant's obstructive or unlawful behavior and/or failW'C to acknowledge personal responsibility by a preponderance of the evidence. The Defendant acknowledges that he may not withdraw his guilty plea because this Office is relieved of its obligations under the agreement pursuant to this paragraph.
Surrender Conditions 18. The parties agree that the Defendant can self-surrender to begin service of his sentence. The Defendant agrees that the Court may order the Defendant to be supervised under pretrial release conditions pending the execution of his sentence.
Court Not a party

19. The Defendant expressly understands that the Com is not a party to this agreement In the federal system, the sentence to be imposed is within the sale discretion of the Court. In particular, the Defendant understands that neither the United States Probation Office nor the Court is bound by the stipulation set forth above, and that the Court will, with the aid of the Presentence Report, determine the facts relevant to sentencing. The Defendant understands that the Court cannot rely exclusively upon the stipulation in ascertaining the factors relevant to the determination of sentence. Rather, in determining the factual basis for the sentence, the Court will consider the stipulation, together with the results -of the presentence investigation, and any other relevant information. The Defendant understands that the Com is under no obligation to accept this Office's recommendations, and the Court has the power 10 impose a sentence up to and including the statutory maximum stated above. The Defendant understands that if the Court ascertains factors different from those contained in the stipulation set forth above, or if the Court should impose any sentence up to the maximum established by statute, the Defendant cannot, for that reason alone, withdraw his guilty plea, and wiU remain bound to fulfill all of his obligations under this agreement. The Defendant understands that neither the prosecutor, his counsel, nor the Court can make a binding prediction, promise, or representation as to what guidelines range 8

or sentence the Defendant will receive. The Defendant agrees that no' one has made such a binding prediction or promise. Entire Agreement 20. This letter supersedes any prior understandings, promises, or conditions between this Office and the Defendant and, together with the Sealed Supplement, constitutes,the complete plea agreement in this case. The Defendant acknowledges that there are no other agreements. promises, undertakings or understandings between the Defendant and this Office other than those set forth in this letter and the Sealed Supplement and none will be entered into unless in writing find signed by all parties.

If the Defendant fully accepts each and every tenn and condition of this agreement, please
sign and have the Defendant sign the original and return it to me promptly. Very truly yours,

'Martin J. larke
Assistan United States Attorney


I have read this agreement, including the Sealed Supplement, and carefully reviewed every part of it with my attorney. I understand it, and I voluntarily agree to it. Specifically .. I bave reviewed the Factual and Advisory Guidelines· with my attorney; and I do not Iamcompletel . (herep' ntationofmyaUomey.


Date Dale

We are Mr. Needleman's attorneys, We have carefully reviewed every part of this agreement. including the Sealed Supplement, With hun. He advised ·us that he understands and. accepts its terms, To our knowledge. his decision to enter into this agreem t 1'5 an informed. and





Attaehment A Stipulated Statement of Faets
A. The Law Office of Stanley Needleman The Defendant, Stanley Needleman, has practiced Jaw as a licensed attorney in the State of Maryland for more than thirty years. His legal practice, which is located at lOOS North Calvert Street in Baltimore City, Maryland. concentrates on the area of criminal defense in both state and federal court. 'The legal fees the Defendant charged depended upon the seriousness of the criminal charges filed against his clients and whether those charges were being prosecuted in state or federal court. For example, to represent a client for a traffic citation or misdemeanor


filed in the District Court of Maryland. the Defendant might charge $750, whereas a client facing felony drug charges in federal court would pay between S10,000 and $30,000 or more. The Defendant did not use an advance fee retainer agreement; rather, he charged a one-time

engagement fee to represent the client whether the case was ultimately dismissed, the client pled
guilty, or the matter went to trial. Payment in full was usually due before the Defendant entered
his appearance in court, although sometimes he allowed his clients

to pay in installments,

A client who hired the Defendant would mail or deliver his payment to the Law Office of

Stanley Needleman at 1005 North Calvert Street Payments were made by cash or check, with
cash being the most common form of payment. An assistant in the office would fill out a receipt, give one copy to the client and attach a second copy to the cash or check payment. in a large bank envelope in a drawer in the front office. If a client paid the Defendant directly. such as when ~ Defendant's met in court or in the office, the Defendant would sometimes ask the office assistant to give the client a A third copy was maintained in the receipt book. All payments and related receipts for a given day were kept

receipt. The fees collected by the Defendant were not always placed in the bank envelope at the front desk. At the close of each business day, the Defendant took the bank envelope with the day's receipts home with him. There was no bookkeeper or accountant to enter the day's receipts into a business ledger, and none of the office assistants tallied the receipts or completed bank deposit

slips. The next business day, the Defendant would return the bank envelope to the drawer empty.


Tax Evasion Federal agents undertook a review of the Defendant's tax returns filed for years 2005·09.

Attached to each of the Defendant's

returns, which were filed jointly with his wife, was a IRS

Schedule C titled "Profit and Loss From Business" that reported the Defendant's annual gross income and expenses for his law practice. The agents also reviewed the law practice's bank account at Wachovia Bank and the Needlemans' joint personal account, also at Wachovia Bank.
A comparison of the amount of gross business income reported on his Schedule C with the total amount of deposits made into the business and personal banks accounts revealed that the two amounts were almost the same. In other words, the business receipts that were deposited into the

bank. accounts were essentially the only monies reported as income by the Defendant on his tax

Federal agents reviewed the number and types offederal and state cases in which the Defendant had entered his appearance as the attorney of record for the years 2006 to 20 10 and estimated that the amount of legal fees he collected for those cases was significantly more than what he had deposited into his bank account. Consequently, the estimated amount of fees charged was also significantly more than what he reported as gross income on his tax returns. Federal agents also interviewed some of the Defendant's prior clients about the fees they had been charged. Some of them said they had paid more than what the agents were able to identify as the deposit of their legal fees into the law firm's bank account. On April 14, 2011, federal agents executed search warrants at the Defendant's law office on Calvert Street and his residence located at 3418 Englemeade Road, Pikesville, Maryland. In the basement ofhis residence, agents found two safes that contained a large amount of cash, some of which was packaged in bags and loose bundles totaling Sl,l S3 ,660. The agents also found business ledgers that chronicled the legal fees paid by hundreds of the Defendant's prior

clients for the period of 2005 to 2010. All the entries were in the Defendant's

handvniting and at all

they listed the approximate dates of the payments and whether they were made by cash or check.
According to former employees of the law finn. the Defendant carried the ledgers with him times and he was the only one they saw who made entries in it.


A review of the ledgers revealed that the majority of the legal fees were paid in cash and a

significant amount of that cash was not being deposited into the Defendant's business and
personal bank accounts. The following table sets forth the difference between the amount of bank accounts, with the difference representing the yearly amount legal fees paid to the law firm as recorded in the ledgers and the amount of money actually deposited into the Defendant's ofundeposited cash.

aQQ2 $861,148.00 ~~~~16Z41~ $335,473.08

2008 $832,945.00 ~422,!l14124 5340,330.76

$802,662.00 S41S,128.70 $327,533.30

Gross Receipts per Ledgers Total Bank Dego§i!§ UDdeposited Cash




noted above, the Defendant used the bank deposit method to report the law firm's

gross income on Schedule C. By not depositing significant amounts of cash received from his

clients and hoarding it in his basement, the hoarded cash was not reflected on the Defendant's bank statements and, thus, was intentionally and willfully omitted from the gross amount of
income he declared to the Internal Revenue Service on Schedule C. The following table summarizes the amount of unreported income for the years 2005

through 2009 and the amount of additional tax due and owing as a result of the under-reporting.
2005 Ledger Total Gross receipts $702,136 2006 $817,373 2007 $857,918 2008 $758,407 2009 $819,870

Reported on Return
Unreported Income Addt') Fed. Tax due

1489,218 $212,980 S80,179

$473.524 5343,849 5126,638 51,517,369 $543,695

$490.045 5367,873 5134,330

$495.536 5262,871 588,167

$490.074 $329,796 S115,381

Total Unreported lacome Total AdditionaJ Federal Tax Due Total Additional State Tax Due


For each of the foregoing years, the Defendant filed a Form 1040 joint tax return that he signed and falsely attested to be true, correct, and complete under the penalties of perjury.


Illegal Structuring of Financial Transactions


Preventing a Bank From FlUnga Currency Transaction Report

As an attorney and a small business owner, the Defendant knew that the Bank Secrecy Act

(BSA) required banks to file a Currency Transaction Report (IRS Form 4789) for cash transactions over $10,000. The Defendant was also aware that the BSA required him to tile an

IRS Form 8300 to report the receipt of more than $10,000 in cash from a single client in one or

more related transactions.
To conceal his ongoing scheme of evading taxes by diverting cash from the law practice, the Defendant structured the bank deposits of cash payments made to the firm. In so doing, he prevented the filing of both of the foregoing types of currency reports, which reduced the likellhood that the government would learn the true amount of income his law firm was receiving. First, the Defendant handled the law firm's receipt of checks and cash differently in order

to prevent his bank nom filing a Currency Transaction Report (CTR) on the cash received. On
most business days, the Defendant would receive a combination of checks and cash. The checks

were almost always deposited within two business days. The cash, however. especially
aggregated daily receipts exceeding $10,000, were not deposited in one lump sum into the business account the next business. Instead, the Defendant hoarded some of the cash. then he took the remaining cash and divided it into smaller bank deposits under $10,000 over multiple days, commingling the cash deposits with checks received on subsequent days. For example, on October 18, 2007, the Defendant received a $30,000 legal fee to represent a federal client, hereinafter "Client One." Client One gave the Defendant a check for $12,000 and $15,000 in cash (the balance ofS3,OOO was later paid in cash). The check was deposited into the law finn's account two business days later on October 22, 2007, along with checks from other clients. The only cash deposit made that day was for $2,500 and it was deposited into the Defendant's personal account. There was no cash deposit into either account on that day or any subsequent day equal to the $15,000 in cash that the Defendant had received.


According to the Defendant's

ledger for the week ending October 19.2007, eleven other
in cash payments that that

clients had paid him an additional $12,090 in cash for a total of$27.090

week. and four had paid him an additional $2,300 in checks for a total of$14,300 in checks

week. All the checks were deposited within a couple of days of the ledger entry, but not all of the

cash. In addition to the aforementioned $2,500 deposited into the personal account on October

22. 2007,

$5,000 of the cash was deposited into the business account on November 11,2007. and

two deposits of cash totaling $4,000 were made into the personal account on November 5 and 7. 2007. Thus, instead of depositing the $27,090 in cash a day or two after it was received as he had done with the checks, which would have triggered the filing of at least one CTR by the bank. the Defendant avoided the eTR by hoarding $15~90 of the cash and dividing the balance of 511,500 into four cash deposits over four different dates in two different bank. accounts.
Similarly. for the week ending January 5, 2007. the Defendant's

ledger reflected the

receipt of $18.040 in cash from thirteen clients and $7,000 in checks from three clients. Two of the three checks were deposited the next business day on January 8.2007 (the disposition of the

third check could. not be determined), OnJy two cash deposits related to that week could be located. There was one cash deposit for $7,000 into the business account on January 4, 2007 and
another one for $6,000 on January 12,2007. Thus, instead of depositing all of the $18,040 of aggregated cash receipts in one or two transactions. which would have triggered the filing of a CTR, the Defendant avoided the CTR by hoarding $5,040 of the cash and dividing the balance of $13,000 over two different dates. During the execution of the search warrant at the Needleman residence on April 14, 2011,
agents discovered and seized a document labeled "Form 8300". Entries had been made on the

form indicating that the Defendant had received $13,000 in cash on behalf of Client Two on April 10,2010. The Fonn 8300 was never filed with the IRS. The entries the Defendant made in his ledger for Client Two also reflected the receipt of$13,OOO in cash on that same date. However, there were no deposits for that exact amount in any of the Defendant's bank accounts.

Furthermore. between April 2, 2010 (the date of the most recent deposit) and April to, 2010, the
Defendant noted in his ledger the receipt of an additional $15,400 in cash, and between April 11 and 14,2010, he noted the receipt of another $5,550 in cash. Of the $33,950 in cash received 5

between April 2, 2010 and April 14, 2010. the Defendant deposited only $11,500 of it and he did

in two separate deposits under $10,000, one for $8,000 on April 12, 2010 and another $3,500

on April 14, 2010. This pattern of managing the finn's cash deposits to avoid the filing of CTRs was
consistent over the five years since January 1, 2006. Indeed, in contrast to the fact that there were a Jarge number of daily deposits of aggregated checks totaling more than $10,000 in unrounded

ameuats, every single one of the 115 cash deposits during that period was less than $10.000 and
all of them were made in rounded off amounts, such as $7500 or $6000. The disparity is even more remarkable in light of the fact that the vast majority of the firm's clients paid in cash and the average total cash deposits per year was approximately $250,000.

The Defendant's

pattern of

structuring the deposit of cash receipts and the consequential hoarding of $1.15 million dollars in
the safes in his basement, resulted in more than $100,000 being structured in a twelve-month span over the five-year period, including the 2007 calendar year.


The Defendant's Failure to File a Form 8300
structuring of cash deposits involved his failure to

The second aspect of the Defendant's one or more related transactions.

file a Form 8300 on occasions when he received more than $10,000 in cash from a single client in Within 15 days of receiving such a payment, the Defendant was For example, and as noted above. on

required to file Form 8300 reporting the transaction.

October 18,2007, the Defendant received a $30,000 legal fee from Client One, $18,000 of which
was in cash. As already noted, Client One's check was deposited into the law finn's account


business days later, but there was no cash deposit equal to the $18.000 the Oefendant received and

he did not file a Form 8300 reporting that cash transaction. It was only after a federal subpoena
was issued a month later, seeking the payment information for Client One. that the Defendant

chose to file a Fonn 8300.
Notwithstanding the large fees the Defendant charged for defending a federal case, the Form 8300 filed for Client One is the only time the Defendant filed the form for a client in the last five years. Indeed, from interviews of former clients represented by the Defendant during that period, federal agents know that other clients also paid the Defendant more than S10,000 in cash. As noted above. Client Two paid $13,000 in cash and a Form 8300 was never filed. Additionally, 6

Client Three gave the Defendant one payment of $20,000 in cash and Client Four paid $17,500 in

yet there are no bank deposits equal to those payments and no Fonn 8300 was ever filed.

Furthermore, as to other federal clients who had hired the Defendant. federal agents found a series of small cash deposits spread over a series of days in close proximity to when the Defendant entered his appearance, but no large lump sum deposits were made and no Form 8300s were ever filed.

[ have read this statement of facts and carefully reviewed it with my attorneys. I agree that the United States could prove these facts at trial and that I am guUty of the conduct described


Kenneth W. Ravenell, Esquire




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