BREAKING NEWS! MOTION HEARING SET FOR MAY 6 @ 3:00pm!
- Steven Ingersoll Files "Judgment Of Acquittal" and "Motion For New Trial"
- Roy C. Bradley, Sr. Says "Me, Too!"
- "Insufficient evidence", "Government misconduct" cited
- Ingersoll floats the "loan" theory...again!
Steven Ingersoll's criminal defense attorney, Martin E. Crandall, filed a motion on March 24 seeking an order for judgment of acquittal, or an order for a new trial.
In addition, Ingersoll's co-defendant Roy C. Bradley, Sr. joined the motion. Filed on behalf of Bradley by his attorney, Mark Satawa, the "joinder" motion claims the "government did not provide sufficient evidence that Roy Bradley knowingly joined a conspiracy with the intent to defraud the United States."
Part 1-STEVEN INGERSOLL'S ARGUMENTS: VIOLATING THE DUE PROCESS CLAUSE?
Ingersoll's motion lists three "separate and independent reasons" for either a judgment of acquittal as to Counts 2, 6, and 7 of the Superseding Indictment, or ordering a new trial.
First, Crandall claims Ingersoll's conviction violates the Due Process Clause because the statutory provisions at issue are "vague or highly debatable" or the governing law is "completely unsettled by any clearly relevant precedent."
Second, Crandall argues that the conviction must be set aside because of the "improper comments made by the prosecutor during opening and closing arguments.
Third, a new trial must be ordered because the prosecution made "repeated remarks in both opening and closing that described the government’s burden of proof as mere preponderance of the evidence, and further described the indictment itself as the standard against which the evidence must be judged".
1) THE LAW GOVERNING THE DISTINCTION BETWEEN SHAREHOLDER LOANS/TAXABLE DISTRIBUTION "TOO VAGUE TO GIVE FAIR NOTICE"
During the case, the prosecution argued that certain distributions from wholly-owned companies to Steven Ingersoll were taxable to Ingersoll. The defense theory was that these distributions were "shareholder loans". Crandall claims that, based on the evidence before the jury, Ingersoll did not have "fair notice" that his tax reporting was improper.
Citing a laundry list of court decisions as precendent (Sanders v. Freeman, United States v. Critzer, United States v. Mallas), Crandall states that "the disagreement regarding taxes owed by Dr. Ingersoll properly belongs in a civil suit, not in a criminal prosecution."
Specifically, the motion states that "the Court gave the jury an eight-factor test for
determining whether the distributions were shareholder loans." The motion does not list the factors, and I was not in court when the jury was being instructed, but the "bona fide loan issue" has been addressed in various income tax cases.
Courts have applied multiple factors to determine whether a transfer of funds was a loan or income, including whether: (1) there was a promissory note or other evidence of indebtedness, (2) interest was charged, (3) there was any security or collateral, (4) there was a fixed maturity date, (5) a demand for repayment was made, (6) any actual repayment was made, (7) the transferee had the ability to repay, (8) any records maintained by the transferor and/or the transferee reflected the transaction as a loan, and (9) the manner in which the transaction was reported for Federal tax purposes is consistent with a loan.
The loan graphic shown above was created for "Money Menage A Trois-Part 2", a story that was published on this blog January 20, 2015. The graphic presents Ingersoll tax attorney Jan Geht's own answers to an eight-factor loan test in Ingersoll's pre-trial defense memorandum. (Maybe Crandall forgot to read that document.)
For example, in the motion Crandall cites a government exhibit that showed Ingersoll had a net worth of $1.9 million and his income tax returns showed him as having adjusted gross income of $356,714 in 2009, $283,741 in 2010, and $334,594 in 2011 as proof of Ingersoll's "independent ability to repay the loans."
While Crandall's motion did not address the source of Ingersoll's "loans", the stunning March 3 testimony of Meg Hackett may have provided the answer. Hackett, a Grand Rapids attorney representing the Grand Traverse Academy board, testified on March 3 that during a May 20, 2013 Academy board meeting, Steven Ingersoll asked the board to characterize his $3.5 million dollar indebtedness to the charter school as a “loan”.
When asked by the prosecution why Steven Ingersoll needed to have his debt “recharacterized”, Hackett said Ingersoll told her he “needed the sums characterized as a loan for reasons related to an IRS investigation and/or audit.” Ingersoll was clearly aware of the ongoing federal investigation into his finances.
Discussing his $3.5 million dollar debt (and referring to spreadsheets detailing the sums he had transferred from the Grand Traverse Academy's accounts to his personal bank accounts and those of Smart Schools Management), Hackett said Steven Ingersoll told those in the meeting that he “could not afford to pay that (his Academy debt) and his taxes all at the same time”, and needed to have the debt characterized as a loan.
The government alleged during the trial the so-called “inculpatory statements” made by Steven Ingersoll on May 20, 2013 were evidence that showed, or tended to show, Ingersoll’s involvement in an act, or evidence that can establish guilt.
But back to Martin Crandall and Steven Ingersoll: in the motion, Crandall points up the "evidence showed that there was an actual act of repayment [to the Grand Traverse Academy] of at least $700,000 in 2011. In fact, the only plausible explanation for the flow of money from Dr. Ingersoll to Smart Schools, Inc. to Smart School Management in June of 2011 is that this flow served as repayment of loans."
Or could it be that the "repayment", made on June 30, 2011 (the last day of the Grand Traverse Academy's fiscal year) was a last-minute, desperate attempt to prevent the Academy from plunging into a deficit?
Hmmm! Miss Fortune will have to wait and see what the Government says in its response to this motion.
2) PROSECUTOR'S OPENING AND CLOSING ARGUMENTS: THE "BALANCED SCALES" AND THE "PUZZLE METAPHOR
Crandall stated that the prosecution twice suggested to the jury that its burden of proof was mere preponderance of the evidence: once in opening, then once during closing rebuttal.
During opening, the prosecutor described the government’s burden of proof as "a balanced scale needing only to be tipped one way or the other. If you think of the scales of justice, presumption of innocence doesn’t mean we start with the scales tipped one way and the government has to tip it the other way. It means we start even, an empty or balanced situation, and the purpose of the trial is to present the evidence that will tip that one way or the other and you, ladies and gentlemen, ultimately decide which way that evidence tips."
Calling the prosecutor’s “balanced scales” metaphor used in opening, and the “puzzle” metaphor for reasonable doubt made in rebuttal, Crandall asserted both "invited the jury to give improper weight to the prosecutions’ personal views of the evidence and improperly described the government’s burden as mere preponderance of the evidence."
Could it be that Crandall, who began his opening statement by waving around an aerial view photo of the Grand Traverse Academy, claiming that everything at the GTA was “transparent, open and obvious”, may merely be jealous of the skillful, evocative hand gestures the Assistant U. S. Attorney employed to underscore her points?
3) BURNING DOWN THE HOUSE: VICKI KUNDINGER'S CREDIBILITY QUESTIONED (My husband prepared the tax returns for Mr. Steve Ingersoll until my husband died...and then after that I had a house fire)
Claiming that the Assistant U. S. Attorney's comments regarding the testimony of one Vicki Kundinger (the widow of Steven Ingersoll's former accountant, Duane) were "improper", Crandall included the following excerpt from the government's closing argument:
This is after Duane Kundinger is dead -- and, by the way, that was yet another act of concealment or defrauding or attempted defrauding committed in the course of this case, where yesterday Steven Ingersoll calls a witness to say, yes, my husband prepared the tax returns for Mr. Steve Ingersoll until my husband died, and then after that I had a house fire.
Now, the obvious intent of that information, bringing that testimony, was to suggest that that's where Steven Ingersoll's records went, but then today you see the letter, Exhibit 427, 'not this one -- and I won't go back to 427, but the letter. Well, in fact, May 10th, before -- of 2010, before Mr. Kundinger died, he had returned not just the tax returns but the records back to Steven Ingersoll. So that was yet another intent to deceive you and you can draw inferences from that, too.
Crandall maintains the letter referenced by the prosecutor (shown above) was related only to work Duane Kundinger had done for Smart Schools, Inc. The motion states it "expressly referenced only the preparation of Form 1120S (S Corp. U.S. Income Tax Return) and a Michigan Business Tax Annual Return (form 4567)", and Crandall asserts that Duane Kundinger returned some documents related to preparation of Smart Schools, Inc.’s 2009 tax returns – not that all documents in Mr. Kundinger’s possession relating to Ingersoll or any of his businesses were also returned.
Tomorrow, in Part 2, Miss Fortune looks at Roy Bradley's motion, submitted by his attorney, Mark Satawa.
I hope there's blueberry pie!