May 29, 2015

Tenth Circuit: Entrapment By Estoppel Instruction Inappropriate Where Defendant Unreasonably Concluded Government Consent

The Tenth Circuit Court of Appeals issued its opinion in United States v. Rampton on Friday, August 8, 2014.

April Rampton learned of a tax refund scheme involving filing 1099-OID forms claiming interest income on debts she owed others, such as her mortgage. She filed her 2007 tax return but subsequently amended it based on the 1099 scheme. She received a refund check from the IRS for $228,967.28 and took that to mean that the tax scheme was legitimate. Subsequently, she told several friends about the scheme and helped them file similar false returns. She charged for her help, even though she was not an accountant or tax professional. In January 2009, an IRS agent met with one of the people Rampton had assisted in the tax scheme. The agent informed Rampton’s friend that she could be fined or imprisoned for her false use of the forms. The friend called Rampton and reported what the agent had said. Rampton told the friend the agent was using a “scare tactic” and continued the scheme. She assisted nine other people in filing false tax returns using the 1099 scheme after the IRS agent visited the friend. Eventually, she was indicted by a grand jury of one count of using a false tax return for herself (Count 1) and 14 counts of helping others file false returns (Counts 2 through 15). She moved to dismiss Counts 2 through 15 before trial based on entrapment by estoppel, averring that the refund check issued by the IRS was an affirmative demonstration that her conduct was legal. The motion failed, but during trial she proposed a jury instruction on the defense of entrapment by estoppel, which was similarly rejected. The jury could not reach a verdict on the first six counts, but convicted her on the remaining nine counts relating to the nine people Rampton assisted after learning the scheme was fraudulent.

Rampton appealed, asserting she was deprived of a fair trial because the jury was not informed of her defense of entrapment by estoppel. The Tenth Circuit disagreed because she was not entitled to the instruction. The Tenth Circuit found no reasonable basis for Rampton to have believed the refund check was a symbol of her conduct’s legality. Rather, it was unreasonable for Rampton to believe the tax scheme was legal.

The Tenth Circuit affirmed Rampton’s convictions.

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