Affirmative Acts, Joint Trials, and Tax-Loss Estimation: The Sixth Circuit Refines Federal Tax Evasion and Sentencing Doctrine in United States v. Karasarides & DiPietro

Affirmative Acts, Joint Trials, and Tax-Loss Estimation: The Sixth Circuit Refines Federal Tax Evasion and Sentencing Doctrine in United States v. Karasarides & DiPietro

I. Introduction

This published opinion of the United States Court of Appeals for the Sixth Circuit arises from a sprawling illegal gambling and tax-evasion scheme in northern Ohio, centered on two so‑called “skill” gaming rooms—Skilled Shamrock and Redemption. The businesses were cash-intensive, deliberately unrecorded, and structured to conceal true ownership and income from authorities. The central figures included:

  • Christos Karasarides Jr. (“Christos”) – a felon and effective co-owner/operator of both gaming rooms, with substantial unpaid tax liabilities and prior convictions for money-laundering and drug offenses.
  • Ronald A. DiPietro – an accountant who helped structure Skilled Shamrock’s finances, maintained detailed internal spreadsheets, and prepared tax returns for co-conspirators that concealed the true gambling income and employment obligations.

After IRS-led raids and a lengthy investigation, a grand jury issued a third superseding indictment charging multiple conspiracies (illegal gambling, defrauding the United States, money laundering) and stand-alone tax and obstruction offenses. Co‑conspirators other than Christos and DiPietro pleaded guilty, leaving those two to face a joint jury trial.

The jury convicted Christos on all counts and convicted DiPietro on all but one of the aiding-and-assisting counts. The district court imposed lengthy prison terms and millions in restitution based on a total tax loss over $3.5 million. On appeal, the defendants mounted a multi-faceted attack on both trial and sentencing.

The Sixth Circuit (Judge Nalbandian writing, joined by Judges Moore and Griffin) affirmed all convictions and sentences, remanding only for the technical correction of a clerical error in DiPietro’s written judgment concerning interest on restitution.

Beyond the case-specific outcome, the opinion is legally significant because it clarifies and refines several points of federal criminal procedure, tax-evasion doctrine, and sentencing law, including:

  • When and how joint trials should be severed, and the burden to show “spillover prejudice.”
  • What counts as an “affirmative act” for felony tax evasion under 26 U.S.C. § 7201, and whether an agency or fiduciary relationship is required.
  • The permissibility of reading indictments (including overt acts) to the jury and the sufficiency of limiting instructions.
  • Standards for calculating tax loss under the Sentencing Guidelines in the face of sparse or destroyed records, including use of co-conspirator losses and extrapolation.
  • The scope of a district court’s duty under Federal Rule of Criminal Procedure 32 to make explicit factual findings, and how plain-error review interacts with that duty.
  • The “sophisticated means” enhancement in tax cases and when a complex concealment structure justifies it.
  • The operation of 18 U.S.C. § 3612(f)’s presumption of interest on restitution, and the use of Rule 36 to correct clerical errors in judgments.

II. Summary of the Opinion

The Sixth Circuit’s core holdings can be summarized as follows:

  1. Severance / Joint Trial: The district court did not abuse its discretion (or plainly err) in refusing to sever DiPietro’s trial from Christos’s. The defendants did not show “compelling, specific, or undue prejudice,” and robust limiting instructions mitigated any risk of spillover prejudice.
  2. Statute of Limitations & Affirmative Acts Under § 7201: For felony tax evasion, the government sufficiently alleged (and could rely on) affirmative acts within the six-year limitations period, such as filing or causing the filing of false returns or supporting documents—even though DiPietro was no longer Christos’s formal power of attorney. Section 7201 does not require a fiduciary or agent relationship; “any manner” covers any act that misleads or conceals.
  3. Reading the Indictment to the Jury: The trial judge did not err in reading the conspiracy’s overt acts from the indictment to the jury. The court repeatedly instructed that the indictment was not evidence, satisfying Sixth Circuit requirements for such readings.
  4. Tax-Loss Calculation (Substantive Reasonableness): The district court reasonably adopted a tax-loss figure above $3.5 million, based on:
    • Christos’s unreported income from Skilled Shamrock and Redemption.
    • Reasonably foreseeable co-conspirator tax losses (Kachner and Dayton).
    • Christos’s large unpaid self-assessed tax liabilities (with interest) for 2012–2014.
    • Unpaid employment taxes from Skilled Shamrock.
    The court did not double-count and permissibly extrapolated Redemption’s profits using Skilled Shamrock data, particularly where defendants had destroyed Redemption’s financial records.
  5. Tax-Loss Findings & Rule 32 (Christos): The district court technically violated Rule 32(i)(3)(B) by adopting the PSR’s tax-loss figures without expressly resolving Christos’s disputes. But under plain-error review, the error did not affect his substantial rights because the record amply supported the adopted figure.
  6. Tax-Loss Explanation (DiPietro): The district court adequately addressed DiPietro’s developed argument (that the loss figure was too speculative) and had no duty to respond to undeveloped or legally frivolous objections raised only in PSR comments and not pressed at the hearing.
  7. “Sophisticated Means” Enhancement: The sophisticated-means enhancement under U.S.S.G. § 2T1.1(b)(2) was properly applied to Christos. His use of shell entities, manipulated sale contracts, sham investments, cash payoffs, and a structured land contract to keep assets out of IRS reach constituted “especially complex or intricate” conduct designed to conceal offenses and hinder detection.
  8. Rule 32 & Sophisticated Means: Because Christos merely offered a bare, vague denial at sentencing (“I don’t see it as…sophisticated”), he did not trigger the court’s duty to make detailed factual findings under Rule 32.
  9. Discretion to Vary from the Guidelines: The district court did not misunderstand its authority to vary based on policy disagreement with the tax-guideline loss table. Its remarks showed awareness of its discretion; it simply chose not to vary based on the § 3553(a) factors and the nature and scope of the scheme.
  10. Restitution Interest & Rule 36: Interest on restitution is presumptively required under 18 U.S.C. § 3612(f), and DiPietro presented no basis for waiver. The original judgment mistakenly checked both “interest required” and “interest waived.” The later “amended judgment” clarifying no waiver was substantively correct but entered after the notice of appeal; the Sixth Circuit therefore remanded for the district court to correct this purely clerical error under Rule 36.

Bottom line: all convictions and sentences were affirmed, with only a limited remand for the narrow purpose of cleaning up the restitution-interest checkbox in DiPietro’s written judgment.

III. Analysis

A. Precedents and Their Role in the Court’s Reasoning

1. Joint Trials and Severance – Zafiro, Phibbs, Causey, Breinig

The Sixth Circuit grounded its severance analysis in a familiar line of authority:

  • Zafiro v. United States, 506 U.S. 534 (1993) – the leading Supreme Court case endorsing joint trials where appropriate. It emphasizes:
    • Joint trials are preferred because they promote efficiency and consistency.
    • Severance is warranted only where a joint trial poses a “serious risk” to a specific trial right or to the reliability of the verdict.
    • Limiting instructions are ordinarily adequate to cure prejudice.
    The panel leaned heavily on this presumption, framing severance as an “extreme remedy.”
  • United States v. Phibbs, 999 F.2d 1053 (6th Cir. 1993) – reiterated that joint trials are favored where there is “common evidence” and that limiting instructions “neutralize adversity” in many contexts. The court used Phibbs to support the idea that much of the evidence here would have been admissible even in a solo trial of DiPietro.
  • United States v. Causey, 834 F.2d 1277 (6th Cir. 1987) – established a four‑factor test for when a defendant seeks severance based on the need for co-defendant testimony:
    1. “Bona fide” need for the testimony.
    2. Substance of the testimony.
    3. Its exculpatory nature and effect.
    4. Likelihood the codefendant would in fact testify if severed.
    The court applied Causey to DiPietro’s affidavit purporting to describe what Christos would say in a separate trial and held the proffered testimony was not truly exculpatory.
  • United States v. Breinig, 70 F.3d 850 (6th Cir. 1995) – a rare case where severe prejudice from a joint trial justified reversal because a co-defendant’s defense strategy involved highly inflammatory character evidence about the appellant (adulterous, abusive, manipulative). The panel emphasized that Breinig is an “exceptional case” and found the evidence about Christos here was nowhere near as inflammatory as in Breinig.

Together, these cases cemented the high bar DiPietro faced in arguing that he suffered “spillover prejudice” from being tried alongside Christos.

2. Affirmative Acts and § 7201 – Sansone and Circuit Cases

A central legal question was what counts as an “affirmative act” for felony tax evasion under 26 U.S.C. § 7201, and whether DiPietro’s acts after June 23, 2016 fit that bill.

The panel relied on:

  • Sansone v. United States, 380 U.S. 343 (1965) – which explains that filing a false tax return is itself a sufficient “affirmative commission” to elevate a § 7203 misdemeanor (failure to file/pay) into a § 7201 felony. The opinion uses Sansone to reinforce that false filings or submissions to the IRS qualify as affirmative acts.
  • Other Circuits:
    • United States v. Hoskins, 654 F.3d 1086 (10th Cir. 2011)
    • United States v. Yurek, 925 F.3d 423 (10th Cir. 2019)
    • United States v. Mal, 942 F.2d 682 (9th Cir. 1991)
    • United States v. Pollen, 978 F.2d 78 (3d Cir. 1992)
    These cases reaffirm that signing and filing false returns or documents are classic affirmative acts of evasion.
  • United States v. Hook, 781 F.2d 1166 (6th Cir. 1986) – cited for the proposition that § 7201's “any manner” language is extremely broad and not limited to a closed set of acts.
  • United States v. McGill, 964 F.2d 222 (3d Cir. 1992) – cited with approval for its broad formulation: an affirmative act is “anything done to mislead the government or conceal funds to avoid payment of an admitted and accurate deficiency.”

From these authorities, the court rejected DiPietro’s novel argument that a valid affirmative act under § 7201 requires a formal agent or power-of-attorney relationship.

3. Rule 32 and Sentencing Findings – White, Solorio, Bradley, Holt

On the sentencing side, the panel relied on a series of Sixth Circuit cases interpreting Federal Rule of Criminal Procedure 32(i)(3)(B), which requires a district court to rule on any disputed factual matters in the PSR that could affect sentencing.

  • United States v. White, 492 F.3d 380 (6th Cir. 2007) – the principal case, insisting on “literal compliance” with Rule 32. A court cannot simply state that the PSR is supported by a preponderance; it must “affirmatively rule” on disputes the defendant “actively raises,” if they could impact the sentence.
  • United States v. Solorio, 337 F.3d 580 (6th Cir. 2003) – cited via White, reinforcing that boilerplate adoption of the PSR is not enough where a defendant has specifically disputed key facts.
  • United States v. Bradley, 897 F.3d 779 (6th Cir. 2018) – shows that even if the district court’s findings are technically insufficient, appellate courts may affirm under plain-error/harmless-error review when the record overwhelmingly supports the PSR’s conservative estimates.
  • United States v. Holt, 116 F.4th 599 (6th Cir. 2024) – underscores that a mere “bare denial” at sentencing is insufficient to trigger Rule 32’s fact-finding obligation; the defense must raise disputed facts “with specificity and clarity.”

These authorities led the court to distinguish between:

  • Christos – who raised specific factual disputes regarding tax loss (triggering Rule 32, though the violation was harmless under plain-error review).
  • Christos’s belated and vague objection to “sophisticated means” – a bare denial, insufficient to invoke Rule 32.
  • DiPietro – who only generally described the loss amount as “speculative” and never developed the more granular objections listed in his PSR responses; thus, the district court was not obliged to respond in detail to those undeveloped points.

4. Guideline Enhancements – Sophisticated Means

On the sophisticated-means enhancement under U.S.S.G. § 2T1.1(b)(2), the panel referred to prior Sixth Circuit decisions:

  • United States v. Paul, 57 F. App’x 597 (6th Cir. 2003) – where paying employees in cash and routing checks through different business accounts, deliberately keeping amounts below $10,000 to avoid reporting thresholds, was found to be sophisticated.
  • United States v. Middleton, 246 F.3d 825 (6th Cir. 2001) – failure to maintain proper records and receipts contributed to a finding of sophistication, as it impeded discovery of the tax offense.

These cases illustrate the key principle: sophistication turns on whether the defendant’s overall scheme was more complex than a garden-variety tax violation and whether it made detection more difficult.

5. Restitution Interest and Clerical Errors – Rule 36 and Related Cases

On the restitution-interest issue, the panel drew on general Rule 36 jurisprudence:

  • United States v. Carr, 421 F.3d 425 (6th Cir. 2005) – clarified that Rule 36 allows correction of “clerical errors” but not substantive changes to a sentence after imposition.
  • Examples from other circuits (e.g., Marmolejos, Bates, Ervasti) were cited to illustrate that correcting errors in names, years of supervised release, or restitution amounts can be within Rule 36’s reach when they are mere misrecitations of the actual sentence imposed.

Here, because interest on restitution arises by operation of law and the record gave no indication that the court intended to waive it, the contradictory checkboxes in the original judgment were treated as a clerical mis-marking suitable for correction under Rule 36.

B. The Court’s Legal Reasoning on Each Issue

1. Severance and Spillover Prejudice

DiPietro claimed that being tried alongside Christos—whose conduct was more extensive and more obviously criminal—unfairly tainted the jury against him. He relied on three theories of prejudice:

  1. Christos supposedly would have given exculpatory testimony for DiPietro at a separate trial.
  2. The jury allegedly could not separate DiPietro’s comparatively minor role from Christos’s more egregious acts (“spillover” prejudice).
  3. Certain evidence introduced largely against Christos (e.g., millions in tax debts, video of cash deposits, details of Redemption) would not have been admissible against DiPietro alone.

The Sixth Circuit carefully dismantled each argument:

  • Exculpatory testimony: Applying Causey, the court found that Christos’s purported testimony (that he told DiPietro he divested from the businesses, that information given for tax preparation was “accurate,” that he had gambling addictions, and that DiPietro stopped acting as power of attorney in 2015) was:
    • Not truly exculpatory – because “willful blindness” and conscious avoidance do not excuse liability where evidence is obvious.
    • Partly cumulative – the fact that DiPietro ceased being POA in 2015 was already in evidence via IRS witnesses.
    • Insufficient to meet Causey’s stringent standard.
  • Spillover prejudice: Citing Causey, Warner, and Fields, the panel reiterated that a defendant is not entitled to severance merely because a co-defendant appears “worse” or more culpable. The defendant must point to specific and compelling prejudice. Here:
    • Substantial evidence independently tied DiPietro to Skilled Shamrock’s finances, ownership structure, and tax evasion.
    • Closing arguments by Christos’s counsel—allegedly bordering on jury nullification—are not evidence and cannot show spillover prejudice.
  • Evidence allegedly inadmissible at a solo trial: The panel reasoned that:
    • Evidence about Redemption, Christos’s tax debts, and cash deposit video footage would likely have been admissible even in a solo trial of DiPietro, because:
      • DiPietro prepared returns that misreported income derived from Redemption as well as Skilled Shamrock.
      • The cash-based nature of the scheme, and its concealment from the IRS, were central to proving that DiPietro knew or should have known the returns were false.
    • Unlike Breinig, there was no torrent of inflammatory character evidence solely about DiPietro that risked a verdict based on moral outrage rather than proof of elements.

Critically, the panel also highlighted the district court’s repeated limiting instructions emphasizing:

  • The indictment is not evidence.
  • Each defendant’s guilt must be decided separately.
  • The jury must focus on the particular crimes charged against each defendant.

Under Zafiro, such instructions are usually sufficient to cure potential prejudice, and juries are presumed capable of compartmentalizing evidence. The record contained no indication that this presumption was overcome here.

2. Limitations Period and “Affirmative Acts” of Tax Evasion

DiPietro argued that the § 7201 charge for evasion of payment (Count 8) was time-barred because the government did not allege an affirmative act within six years of indictment. He also argued that once he ceased being Christos’s power of attorney in 2015, he could no longer commit “affirmative acts” of evasion on Christos’s behalf.

The indictment, however, alleged several affirmative acts within the six-year window, including that DiPietro:

  • Filed (or caused to be filed) tax returns for Christos’s wife in 2015 and 2016 with incorrect SSNs or names.
  • Submitted misleading documents supporting Christos’s 2014 tax return around September 2016.
  • Caused Christos’s 2016 tax return to omit income from Skilled Shamrock.

The court’s reasoning proceeded in two steps:

  1. What qualifies as an affirmative act?
    • Under Sansone and the other cited cases, filing or causing the filing of false returns or documentation is an affirmative act that transforms non-payment or non-filing into felony evasion.
    • The indictment alleged precisely that kind of conduct within the limitations period.
  2. Is an agent/fiduciary relationship necessary?
    • Section 7201 criminalizes any willful attempt “in any manner” to evade or defeat tax or payment.
    • The statute is concerned with acts that mislead the government or conceal funds—not formal relationships.
    • As the court put it: “Any means any, so no agent relationship is required.”

The court therefore rejected DiPietro’s attempt to import a novel “agency requirement” into § 7201, which finds no basis in statutory text or precedent.

3. Reading the Indictment, Overt Acts, and Jury Instructions

DiPietro complained that, when the district judge elected to read the overt acts of the conspiracy (Count 1) aloud, he did so in a way that could have led the jury to treat those allegations as established facts.

But the appellate court emphasized:

  • Reading an indictment to the jury is a routine, discretionary practice aimed at explaining the charges (Maselli, Smith).
  • If the court reads the indictment, it must give a limiting instruction that the indictment is not evidence (Stapleton, Scales).
  • Here, the court repeatedly instructed the jury that:
    • The indictment “is not evidence,”
    • It does “not even raise any suspicion of guilt,”
    • It is just a formal charging document.

Although the judge did not explicitly repeat “I’m reading from the indictment” at the moment he began reciting overt acts, the prior instructions were clear and controlling. The panel distinguished this from the problematic instructions in:

  • Sandals v. United States, 213 F. 569 (6th Cir. 1914) – where the judge essentially told the jury that the defendants’ conduct “operated as a fraud” and that there was no point in debating good faith.
  • United States v. El-Bey, 873 F.3d 1015 (7th Cir. 2017) – where the judge’s phrasing suggested he was declaring certain acts to be mail fraud and false claims as a matter of fact.

In contrast, the trial judge here did no more than read the allegations and reiterate that the jury had to find facts and guilt independently. No error was found.

4. Tax-Loss Calculation: Estimation, Co-Conspirator Losses, and Double Counting

The calculation of tax loss under the Guidelines (U.S.S.G. §§ 2T1.1, 2T4.1) drove the advisory sentencing ranges for both defendants. The district court adopted the government’s overall tax-loss number of $5,451,520, which placed the loss comfortably above $3.5 million for guideline purposes.

The loss components were:

  1. Christos’s unreported gambling income – approximately $849,012 in unpaid taxes (combining his unreported legal gambling winnings and profits from Skilled Shamrock and Redemption).
  2. Co-conspirator losses (Kachner and Dayton) – about $1,233,704, deemed reasonably foreseeable to Christos based on the joint nature of the scheme.
  3. Self-assessed but unpaid taxes (2012–2014) – about $3,112,527, reflecting Christos’s prior assessed liabilities plus accrued interest.
  4. Skilled Shamrock’s unpaid employment taxes – approximately $256,277.

The appellate court upheld this calculation on several key grounds:

  • Reasonable estimate standard: Under Application Note 1 to § 2T1.1, the sentencing court need only make a “reasonable estimate” of tax loss by a preponderance of the evidence, especially when defendants have impeded precise calculation (e.g., by destroying records).
  • Use of Skilled Shamrock data to estimate Redemption: Redemption’s weekly records had been destroyed by the conspirators. The IRS instead used Skilled Shamrock audit spreadsheets as a baseline, then treated Redemption as equal to Skilled Shamrock (even though Redemption had twice the number of machines and may have been more profitable). The panel characterized this as conservative and reasonable given the record destruction.
  • Co-conspirator losses as relevant conduct: Citing Lombardo and § 2T1.1’s commentary, the court held that all conduct within the common scheme or plan is relevant unless “clearly unrelated.” Because Christos worked jointly with Kachner and Dayton in the same gambling ventures, their tax losses were reasonably foreseeable and properly attributed to him at sentencing.
  • No double counting: Christos argued that the $849,012 (unreported gambling income) was included within the $3.1 million evasion figure. The court rejected this:
    • The $849,012 reflected underreported income (including illegal gambling operations).
    • The $3.1 million was based on separately assessed but unpaid tax liabilities from legitimate income for 2012–2014, which he acknowledged but never paid.
    • These were distinct losses and could be aggregated under § 2T1.1 because both represented “tax that the taxpayer owed and did not pay.”

The Sixth Circuit also rejected Christos’s contention that the government had “abandoned” its reliance on co-conspirator losses based on one ambiguous sentencing statement. The panel recognized that the government immediately corrected itself and reaffirmed that co-conspirator tax loss was included.

5. Rule 32 and the Adequacy of Sentencing Explanations

a. Christos’s Rule 32 Challenge

Christos contested the $3.5 million+ tax-loss figure at sentencing but did not object when the district court initially stated it would adopt the PSR’s offense level (based on that loss) and then proceeded to sentence him.

The appellate court applied plain-error review because Christos did not object when asked the Bostic question (inviting contemporaneous objections after pronouncement of sentence). It found:

  • Error: The district court failed to “affirmatively rule” on the specific disputed factual issues about tax loss, instead simply adopting the PSR.
  • Plainness: Given White and its progeny, this type of Rule 32 violation is well established.
  • No prejudice: Christos could not show a “reasonable probability” that a fuller explanation or separate factual findings would have led to a lower loss figure or different sentence, especially given the strong evidentiary support for the government’s calculations. The court cited Bradley, where a similar failure was deemed harmless because the record “amply supported” the conservative estimate in the PSR.

Accordingly, although the panel found a procedural error, it did not warrant reversal or remand because it did not affect Christos’s substantial rights or undermine the fairness of the proceedings.

b. DiPietro’s Rule 32 / Explanation Challenge

DiPietro argued that the district court failed to address his “non-frivolous” objections to the PSR’s tax-loss calculations. The panel disagreed for two reasons:

  1. Many objections were frivolous or directly contradicted the jury’s verdict – for example, disavowing responsibility for certain returns (like Kachner’s 2017 return) even though he had been convicted of aiding and assisting in preparing those exact false returns.
  2. He did not develop most granular objections at sentencing:
    • His sentencing memorandum and oral argument did not articulate or explain how those PSR objections should change the loss figure.
    • He limited his oral challenge to a generalized claim that the loss figure was speculative and should be reduced by two levels.
    • The district court explicitly responded to this argument, stating that the loss computation was “as accurate as it can be” given the evidence and professional IRS analysis.

Under cases like Wallace, Judge, and Satterfield, a sentencing court must respond to “particular, nonfrivolous” arguments—but is not required to address vague assertions or re-litigation of the convictions themselves. The panel concluded that the district court’s targeted explanation matched the narrow, generalized argument DiPietro actually made.

6. Sophisticated-Means Enhancement

The sophisticated-means enhancement under § 2T1.1(b)(2) adds two offense levels if the tax offense involved “especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense.” The commentary gives examples like shell entities and fictitious accounts but stresses that the list is not exhaustive.

The panel cataloged Christos’s conduct:

  • Creating and using the ALCAK Properties entity, ostensibly owned by his son, to:
    • Purchase property for a cigar bar using a combination of documented and undocumented (cash) payments.
    • Engineer a $30,000 off-the-books cash discount and correspondingly lower formal price, thereby laundering cash into an ostensibly legitimate asset.
  • Soliciting “investors,” like Roger Steed, to issue large checks which Christos then repaid in cash, recording the transaction as a loan via a fake promissory note — again converting illicit cash into apparently legitimate paper transactions.
  • Using an attorney (David Thomas) to:
    • Structure a land contract and later an LLC transaction (One Dunkeith) to keep legal title to a residence out of Christos’s name, frustrating IRS efforts to levy the property.
    • Create a sham employment arrangement with “Enterprise Internet Solutions” to help Christos evade supervised-release conditions prohibiting gambling-related work. Christos paid $25,000 in cash, memorialized by a promissory note, to make it appear he had legitimate employment.

These steps collectively:

  • Used layered legal structures (entities, contracts, sham investments) to obscure ownership and sources of funds.
  • Relied heavily on untraceable cash and fake documentation to legitimize illegal income.
  • Were specifically aimed at evading both the IRS and the conditions of federal supervised release.

Against that backdrop, the court found the enhancement clearly justified: Christos’s evasion was not a simple failure to pay or omission on a tax form; it was embedded in a sophisticated laundering and concealment apparatus.

On the associated Rule 32 challenge, the panel applied Holt and Lang, holding that Christos’s one-sentence assertion that he did not see the scheme as “substantially sophisticated” was too vague and perfunctory to trigger the court’s duty to make detailed factual findings. There was, in short, no Rule 32 error in how the enhancement was imposed.

7. Discretion to Vary From the Guidelines

Christos argued that the district court misapprehended its power to vary from the Guidelines range based on a policy disagreement with the tax-loss table, effectively believing that it could not vary solely because the Guidelines were high.

The panel carefully parsed the sentencing transcript, especially the judge’s comments about:

  • The steep guideline ranges in high-loss cases (compared to some violent or drug crimes).
  • The fact that “Congress has adopted the Guidelines” and that the Guidelines account for large financial losses.
  • The statement that “in order to vary from the Guidelines there has to be a substantial reason” not considered by the Sentencing Commission.

Read in context, the panel concluded:

  • The judge was articulating why he chose not to vary in this case, not expressing a belief that he could not vary as a matter of law.
  • The judge explicitly explored case-specific reasons for and against leniency, including the long-running nature of the scheme and its resource-intensive investigation, and observed that the harm could have been minimized had the defendants come clean earlier.
  • The same judge in fact granted Christos a downward departure by adjusting his criminal history category, confirming the judge understood his discretion to move off the Guidelines when appropriate.

The panel distinguished United States v. Thomas-Mathews, where a district court essentially believed Congress and the Sentencing Commission, not the court, controlled the crack/powder ratio. Here, the judge did not make a comparable legal error; he simply regarded the guideline range as appropriate in light of the § 3553(a) factors.

8. Restitution Interest and Rule 36

Finally, DiPietro challenged the post-sentencing “amended judgment” that removed a checkmark indicating that interest on restitution was waived, leaving only the box requiring payment of interest.

Key legal points:

  • 18 U.S.C. § 3612(f)(1) – provides that a defendant “shall pay interest” on any restitution over $2,500.
  • 18 U.S.C. § 3612(f)(3) – allows the court to waive interest only if it determines the defendant lacks ability to pay interest.
  • Presumption: Courts presume interest is required unless the defendant affirmatively seeks and justifies waiver.

At DiPietro’s sentencing:

  • No party raised the issue of interest.
  • No findings were made about his ability to pay interest.
  • By operation of law, interest therefore attached to his restitution.

The original written judgment inadvertently checked both:

  • “Interest on restitution is required,” and
  • “Interest requirement is waived.”

The district court later issued an “amended judgment” removing the waiver box. The Sixth Circuit noted that:

  • Because DiPietro had already filed a notice of appeal, the district court technically lacked jurisdiction to enter a substantive amended judgment.
  • However, the inconsistency was purely clerical—mis-marking boxes that did not reflect any conscious sentencing choice, as the court had never decided to waive interest.

Thus, the appellate court categorized the original error as a classic “scrivener’s error” under Rule 36, which can be corrected at any time to conform the written judgment to the sentence actually imposed (and required by law). The panel therefore affirmed the sentence but remanded solely to allow the district court to correct the judgment properly under Rule 36.

IV. Complex Concepts Simplified

1. Conspiracy and “Overt Acts”

A federal conspiracy exists when two or more people agree to commit a federal crime, and at least one of them commits some “overt act” in furtherance of the agreement (e.g., purchasing equipment, making payments, filing false documents). The overt act need not be criminal on its own; it simply furthers the agreed crime. In Count 1, the government alleged specific actions—like operating cash-only gambling and keeping sham ownership records—to show the conspiracy was not just talk.

2. Felony Tax Evasion vs. Simple Non-Filing

  • 26 U.S.C. § 7203 (Misdemeanor): Willful failure to file a tax return or pay tax.
  • 26 U.S.C. § 7201 (Felony): Willful attempt “in any manner” to evade or defeat a tax or its payment.

The felony version requires an affirmative act—something extra like filing a false return, hiding assets, or submitting misleading documents. Merely doing nothing (not filing, not paying) is generally not enough for the felony, but as Sansone and this opinion confirm, filing false paper with the IRS is classic affirmative misconduct.

3. Statute of Limitations in Tax Evasion

Most federal tax crimes have a six-year statute of limitations. That means:

  • The government must allege and ultimately prove that at least one affirmative act of evasion occurred within six years before the indictment (or before a prior indictment to which the count relates back).
  • Earlier acts can show context and intent but cannot be the only acts supporting the charge.

In DiPietro’s case, the later returns and supporting documents he filed (or caused to be filed) within that six-year period kept the charge timely.

4. Tax Loss Under the Guidelines

In tax cases, sentence length under the Guidelines often hinges on “tax loss,” which is the amount of tax owed but not paid. Under § 2T1.1:

  • Courts may rely on a reasonable estimate where records are missing, incomplete, or intentionally destroyed.
  • All relevant criminal conduct that is part of the same scheme counts, including unreported income and unpaid assessed liabilities, as long as they are not “clearly unrelated.”
  • Losses from co-conspirators are attributable to a defendant if reasonably foreseeable in jointly undertaken conduct.

5. Rule 32 and the “Bostic Question”

Rule 32 requires judges at sentencing to:

  • Address factual disputes that could affect the sentence.
  • Make findings by a preponderance of evidence.

In the Sixth Circuit, after the judge pronounces sentence, they typically ask the defense whether they have any “objections not previously raised” to the sentence or the manner of its imposition—this is the Bostic question. If the defense stays silent, later appellate review of many procedural sentencing claims is limited to plain error, which is harder for defendants to win.

6. “Sophisticated Means” in Tax Cases

“Sophisticated means” does not require offshore accounts or international transactions. It broadly covers schemes involving:

  • Layered transactions.
  • Use of entities and contracts to obscure true ownership or income source.
  • Systematic cash usage and deliberate lack of records.
  • Sham investments and promissory notes masking real cash flows.

The key question is: Did the defendant make the crime significantly harder for authorities to detect or unravel, beyond what a typical tax violator might do?

7. Restitution Interest under 18 U.S.C. § 3612(f)

When a defendant owes more than $2,500 in restitution:

  • The default rule is that interest is due—much like interest on a civil judgment.
  • The court may waive interest if it finds the defendant cannot afford to pay it, but the defendant must raise and substantiate that issue.
  • Silence at sentencing usually means interest applies automatically by statute.

8. Rule 36 and Clerical vs. Substantive Errors

Rule 36 allows courts to correct “clerical errors” in the record, such as:

  • Typos in names or dates.
  • Mis-written supervised release terms.
  • Math errors in restitution amounts.

But Rule 36 cannot be used to fundamentally change the sentence after the fact (e.g., increasing imprisonment). A good rule of thumb:

  • If the written judgment obviously fails to reflect what the court actually said or legally must impose, Rule 36 can fix it.
  • If the court is trying to rethink or increase punishment, Rule 36 is not the vehicle; that would be a substantive resentencing.

V. Impact and Broader Significance

1. Tax-Evasion Prosecutions and Professional Gatekeepers

The opinion has significant implications for prosecutions involving accountants, tax preparers, and other financial professionals:

  • It reaffirms that filing or causing the filing of false returns, schedules, or supporting documents is an affirmative act sufficient for § 7201.
  • It explicitly rejects the idea that only those with formal agency relationships (e.g., power of attorney) can commit affirmative acts of evasion on someone else’s behalf.
  • Professionals can be liable for evasion-of-payment—not just evasion-of-assessment—when they help conceal income or assets, even after formal representation ends, as long as they perform acts that mislead the IRS.

2. Joint Trials and Severance Strategy

Defense counsel in multi-defendant white-collar and tax cases should note:

  • The Sixth Circuit continues to view severance as an extraordinary remedy, especially where joint evidence is pervasive and conspiracies are charged.
  • To support a severance motion, defendants must:
    • Articulate genuinely exculpatory testimony a co-defendant would offer in a separate trial (not just corroboration or willful-blindness narratives).
    • Demonstrate concrete, extreme, and unfair prejudice, not just the existence of a more culpable co-defendant.
  • Limiting instructions remain the default remedy; appellate courts presume juries can compartmentalize evidence unless confronted with extraordinary facts like those in Breinig.

3. Sentencing in Tax and Financial-Crime Cases

On sentencing, the opinion underscores:

  • Tax-loss estimates can be robustly upheld even where precise records are missing or destroyed, if:
    • The government uses reasonable extrapolation (e.g., comparing similar businesses).
    • Co-conspirator conduct is included as reasonably foreseeable.
    • Distinct forms of unpaid tax (underreported vs. unpaid assessed) are carefully distinguished.
  • Defendants who destroy or fail to keep records will receive little sympathy when the government approximates loss based on conservative assumptions.
  • Rule 32 disputes must be clearly and specifically raised at sentencing; failure to do so often relegates defendants to plain-error review and severely limits chances for remand.
  • “Sophisticated means” is broad and flexible, readily encompassing domestic schemes involving shell entities, real-estate contracts, sham jobs, and manipulated paper trails—not just foreign accounts or elaborate corporate structures.

4. Restitution and Clerical Corrections

The decision provides a clear, practical message:

  • Interest on restitution is presumptively mandatory in federal cases, and silence at sentencing is usually fatal to any later claim for waiver.
  • Appellate courts will treat contradictory checkboxes or obvious drafting errors as clerical, subject to correction under Rule 36, rather than grounds for substantive resentencing.

5. Standards of Review and Preservation

Finally, the opinion subtly but importantly reinforces:

  • The need for defense counsel to:
    • Renew severance motions at the close of evidence (to avoid disputes over waiver vs. plain-error review).
    • State precise factual objections to the PSR and sentencing rationale, and to renew them when asked by the court at the end of the hearing.
  • The Sixth Circuit’s inclination, where possible, to:
    • Apply plain-error review rather than declare issues entirely waived, in step with Supreme Court admonitions to resolve claims on the merits when feasible.
    • Nevertheless hold defendants to their burden to demonstrate prejudice, especially in complex sentencing disputes.

VI. Conclusion

United States v. Karasarides & DiPietro is a comprehensive decision that reinforces and clarifies federal law across several important dimensions of criminal tax enforcement and sentencing.

Doctrinally, it:

  • Confirms that any act that misleads the IRS or conceals assets can constitute an “affirmative act” under § 7201, without any requirement of a formal agent relationship.
  • Reaffirms the strong presumption in favor of joint trials and the high threshold for severance and “spillover” prejudice.
  • Endorses the widespread practice of reading indictments to juries, so long as courts clearly instruct that indictments are not evidence.
  • Solidifies the principle that tax loss may be reasonably estimated on a robust evidentiary record, particularly where defendants themselves have frustrated precise calculation.
  • Clarifies the scope of Rule 32: courts must expressly rule on genuinely disputed, material PSR facts, but not on vague denials or undeveloped objections.
  • Affirms a broad, functional interpretation of “sophisticated means” in tax cases, capturing multilayered domestic laundering and concealment schemes.
  • Emphasizes the statutory presumption of restitution interest and the permissible use of Rule 36 to correct clerical errors in judgments.

Practically, the opinion sends clear signals to litigants:

  • Accountants and preparers cannot insulate themselves from felony tax-evasion liability by pointing to formal termination of representation when they continue to facilitate concealment.
  • Defendants in joint trials must do more than allege general prejudice—they must demonstrate concrete and exceptional harm beyond what limiting instructions can cure.
  • Sentencing objections must be precisely articulated and pressed at the hearing; otherwise, review will be extremely deferential.

In sum, Karasarides & DiPietro is a significant addition to Sixth Circuit precedent on criminal tax law and sentencing. It underscores that complex, cash-based conspiracies to evade tax and launder proceeds will be met not only with substantial punishments, but also with a judicial willingness to adopt reasonable and even conservative inferential methods in reconstructing the true tax loss and holding all participants accountable.

Case Details

Year: 2025
Court: Court of Appeals for the Sixth Circuit

Comments