Sentence doubled for income tax cheat

Federal appeals court ruled that judge erred in not weighing record

October 04, 2003|By Gail Gibson | Gail Gibson,SUN STAFF

A former Baltimore landfill operator who was ordered in 2001 to serve a year in a halfway house for drastically underreporting his income on federal tax returns was resentenced yesterday to two years in prison after an appeals court ruled his original punishment was too lenient.

U.S. District Judge Marvin J. Garbis had agreed at Manus E. Suddreth's first sentencing not to include a prior drunken driving conviction as part of Suddreth's criminal history - one factor in federal sentences.

The judge also gave Suddreth a break after finding he had relied heavily on bad tax advice from an accountant.

Neither factor was grounds to shave time off Suddreth's sentence, the 4th U.S. Circuit Court of Appeals ruled this year - sending the case back for a second sentencing hearing nearly two years after the first.

Garbis made it clear yesterday that he thought the first sentence was proper, saying that he is "absolutely, 125 percent convinced" that a conviction for driving under the influence of alcohol should not be a factor in punishment for a tax offense.

"It's not what I thought was the right result, but it's the legally correct result and it's what we have to do," Garbis said as he handed down the two-year term.

Suddreth, 58, of Glen Burnie, has served his original sentence and will get credit for the 12 months he spent at a halfway house, leaving him with 12 months to serve in a federal prison.

"Look, Mr. Suddreth from the beginning has accepted the judgment of both the jury and now the court," defense attorney Gregg L. Bernstein said after the hearing.

"He's certainly not happy about having to go back to prison, but he's going to do what he's got to do."

The case returned to court amid a stepped-up effort by the Justice Department to challenge sentences that are lighter than what federal guidelines prescribe.

In a memo to federal prosecutors this summer, Attorney General John Ashcroft said prosecutors should notify officials in Washington whenever a federal judge hands down a sentence below the guidelines, setting in motion a possible appeal.

The appeal in Suddreth's case predated that directive.

Suddreth, who owned the Patapsco Excavating Co., was convicted by a Baltimore federal jury in July 2001 of two counts of filing false tax returns in 1993 and 1994.

In the first year, he reported earning $76,984 although federal authorities determined he had earned more than $329,000.

The next year, Suddreth earned an estimated $165,000 but reported income of just $4,700.

At trial, Bernstein argued that any reporting problems were the fault of the accountant who had prepared the returns, a former Internal Revenue Service agent named Marc Einstein.

But federal prosecutors said Suddreth had purposely tried to disguise his earnings, diverting nearly $500,000 during that two-year period from his business accounts to pay for personal expenses.

Agents with the IRS criminal investigation division determined that Suddreth used a cash payroll system at his business and would deposit customers' checks directly to his personal bank account.

Court records show he used company money to recondition an antique car, make renovations at his West Virginia hunting camp and establish a tanning salon.

At the first sentencing hearing in November 2001, Garbis reduced Suddreth's potential sentence, in part on the grounds that Einstein - who was not charged - shared much of the blame.

"I think you were grossly disserviced, as was the government, ... by this so-called accountant who made this offense far worse than it would have been," Garbis said.

Government lawyers appealed, and the appeals court in its April ruling said even if Einstein's work was unprofessional, "we believe that the district court's focus minimized Suddreth's culpability for his own misdeeds."

Sentencing challenges by federal prosecutors are rare, though there have been some high-profile examples in Baltimore's federal court.

In 1995, prosecutors successfully appealed the probation sentence handed down by U.S. District Judge William M. Nickerson to Annapolis lobbyist Bruce C. Bereano after his conviction in a campaign-contribution fraud scheme.

"I applaud the Department of Justice for pursuing the appeal in the case," said Gregory R. Szczeszek, special agent in charge of the IRS Criminal Investigation office in Baltimore.

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