Uncharged Tax-Year Loss Counts as Relevant Conduct When a Defendant Continues the Same Evasion Scheme, and “Sophisticated Means” Applies Even if the Scheme Was Purchased

Introduction

In United States v. Ulibarri (10th Cir. May 27, 2026), the Tenth Circuit affirmed a 41-month sentence imposed on Colorado dentist Ryan Ulibarri after he pleaded guilty to six counts of tax evasion under 26 U.S.C. § 7201 (tax years 2017–2022). The case arose from Ulibarri’s multi-year use of an “abusive-trust tax scheme” marketed by Larry Conner, in which business income was routed through a series of sham trusts and a private foundation, with trust funds then used to pay personal expenses while evading federal income taxes.

On appeal, Ulibarri challenged both: (1) the procedural reasonableness of the sentence under the U.S. Sentencing Guidelines (including inclusion and calculation of a 2023 uncharged tax loss and application of the “sophisticated means” enhancement), and (2) the substantive reasonableness of the within-Guidelines sentence under the 18 U.S.C. § 3553(a) factors.

Summary of the Opinion

The Tenth Circuit affirmed across the board. Procedurally, it held the district court properly: (i) treated the 2023 tax-year loss as “relevant conduct” because Ulibarri continued the same trust-based scheme without interruption, and (ii) reasonably estimated the 2023 tax loss using the Guidelines’ proxy method for failure-to-file conduct. The court also upheld the two-level “sophisticated means” enhancement based on Ulibarri’s use of multiple fictitious entities, nominee grantors, and deceptive representations to banks and others.

Substantively, the panel held the 41-month term (top of the 33–41 month range) was entitled to a presumption of reasonableness and that Ulibarri’s arguments largely asked the appellate court to reweigh § 3553(a) factors, which it would not do.

Analysis

Precedents Cited

  • United States v. Haley, 529 F.3d 1308 (10th Cir. 2008): Used for the abuse-of-discretion reasonableness framework and the definition of procedural unreasonableness (miscalculation, treating Guidelines as mandatory, failing to consider factors, erroneous facts, inadequate explanation). The court anchored both its standard of review and the procedural checklist in Haley.
  • United States v. Smart, 518 F.3d 800 (10th Cir. 2008): Cited to reinforce the two-part structure of reasonableness review—procedural versus substantive—helping frame the panel’s compartmentalized treatment of Ulibarri’s claims.
  • United States v. Maldonado-Passage, 56 F.4th 830 (10th Cir. 2022): Cited for the substantive reasonableness inquiry—whether the sentence fairly reflects relevant factors/circumstances—supporting the court’s conclusion that Ulibarri did not overcome the presumption for a within-Guidelines sentence.
  • United States v. Henry, 164 F.3d 1304 (10th Cir. 1999): Supplied the mixed standard for Guidelines issues—de novo for interpretation/application and clear error for factual findings—structuring review of loss calculations and the “sophisticated means” enhancement.
  • United States v. Meek, 998 F.2d 776 (10th Cir. 1993): Invoked for the interpretive rule that Guidelines commentary is binding unless plainly erroneous or inconsistent, which matters in tax cases because § 2T1.1’s commentary (especially Note 2 on aggregation) drives the relevant-conduct analysis.
  • United States v. Maynard, 984 F.3d 948 (10th Cir. 2020): Provided a close analog for aggregating tax loss across years where a defendant maintained a continuing pattern using the same evasive structure (fictitious corporations there; sham trusts here). The court used Maynard to validate treating sustained, similar conduct as one course of conduct.
  • United States v. Chappelle, 78 F.4th 854 (6th Cir. 2023): Quoted for the practical meaning of “sophisticated means” as more complex than “simply lying on a 1040 form,” supporting a common-sense threshold for the enhancement.
  • United States v. Sorenson, 148 F.4th 992 (8th Cir. 2025): Cited to show that using shell companies and fictitious religious/charitable entities to hide funds and pay personal expenses fits comfortably within “sophisticated means,” directly paralleling Ulibarri’s use of trusts and a private foundation.
  • United States v. Lewis, 93 F.3d 1075 (2d Cir. 1996): Cited for the proposition that the sophisticated-means enhancement can apply even if the defendant did not personally develop the scheme, because what matters is the complexity faced by the IRS in detecting the conduct.
  • United States v. Rocha, 145 F.4th 1247 (10th Cir. 2025): Cited for deference to district courts in applying § 3553(a) to the “individual case,” reinforcing the panel’s unwillingness to second-guess the sentencing judge’s weighing.
  • United States v. Alapizco-Valenzuela, 546 F.3d 1208 (10th Cir. 2008): Established the presumption of substantive reasonableness for within-Guidelines sentences, which Ulibarri failed to rebut.
  • United States v. Barnes, 890 F.3d 910 (10th Cir. 2018): Provided a clean enumeration of the § 3553(a) factors, which the opinion used to demonstrate the district court’s coverage of the statutory considerations.
  • United States v. Budder, 76 F.4th 1007 (10th Cir. 2023): Cited for the principle that appellate courts will not reweigh sentencing factors already presented and considered, directly dispatching Ulibarri’s main substantive attack.
  • United States v. Lawless, 979 F.3d 849 (10th Cir. 2020): Reinforced that “reweighing” is outside the appellate role in substantive reasonableness review; it was central to the panel’s conclusion that Ulibarri’s appeal largely sought an impermissible second sentencing hearing.
  • United States v. Guevara-Lopez, 147 F.4th 1174 (10th Cir. 2025): Supported “substantial deference” to the district court’s § 3553(a) analysis, complementing Rocha and Alapizco-Valenzuela.

Legal Reasoning

1) Aggregating the 2023 Tax Loss as Relevant Conduct

The core procedural dispute was whether a 2023 tax loss (uncharged) could be included in the total tax loss used to set the base offense level under USSG §§ 2T1.1(a)(1) and 2T4.1. The court affirmed inclusion under USSG § 1B1.3(a)(2) (relevant conduct) and the tax-specific aggregation principle in USSG § 2T1.1, cmt. n.2: “all conduct violating the tax laws should be considered as part of the same course of conduct or common scheme or plan unless the evidence demonstrates that the conduct is clearly unrelated.”

The panel emphasized the factual finding that Ulibarri’s 2023 behavior “did not vary” from prior years: he continued funneling income through the same sham trusts, continued paying personal expenses through trust accounts, and continued concealing control. The receipt of a DOJ target letter did not mark a break; rather, the district court viewed his failure to stop as confirming continuity. The Tenth Circuit treated that as a paradigmatic “same course of conduct” case, consistent with the commentary’s focus on whether “the defendant uses a consistent method to evade or camouflage income.”

Ulibarri’s attempt to characterize 2023 as merely passive “failure to file” conduct did not persuade the court because the relevant-conduct inquiry turned on the continuity of the evasive method, not charging labels. Put differently: the same scheme continued to generate unpaid taxes, making 2023 “uncharged” but not “clearly unrelated.”

2) Approving a “Reasonable Estimate” for 2023 Tax Loss

Because Ulibarri did not file a 2023 return, the IRS agent used USSG § 2T1.1(c)(2)(A), which treats tax loss as “20% of the gross income . . . less any tax withheld or otherwise paid, unless a more accurate determination of the tax loss can be made.” The district court accepted a conservative gross receipts figure that could be verified through bank records ($976,223) rather than a higher IRS-records figure ($1.6 million). It then estimated cost of goods sold by averaging Ulibarri’s prior returns (17%) and applied the 20% proxy to the resulting gross income.

The panel’s approval hinged on the Guidelines’ express tolerance of uncertainty: USSG § 2T1.1, cmt. n.1 contemplates that “the amount of the tax loss may be uncertain” and authorizes a “reasonable estimate based on the available facts.” The court also underscored an allocation-of-information dynamic common in tax sentencing: Ulibarri criticized missing deductions/expenses but offered no alternative documentation for 2023, and the court accepted that the government and court are not required to build a defendant’s itemized deductions in the absence of evidence.

3) “Sophisticated Means” Applies to Multi-Entity Concealment Even If Purchased

The district court applied USSG § 2T1.1(b)(2)’s two-level “sophisticated means” enhancement. The Tenth Circuit affirmed, relying heavily on Application Note 5’s examples—“hiding assets . . . through the use of fictitious entities [or] corporate shells . . . ordinarily indicates sophisticated means.” The opinion found multiple markers of sophistication: a layered trust/foundation structure, use of nominee friends as purported grantors, multiple financial accounts, and affirmative misrepresentations to banks about control and purpose.

Critically, the panel rejected Ulibarri’s “I only followed Conner’s plan” defense. It held the text requires only that the offense “involved” sophisticated means and, echoing United States v. Lewis, reasoned that outsourcing the design does not reduce the concealment burden on the IRS. The court also treated Ulibarri’s continued use after repeated professional warnings as undercutting any claim of unwitting reliance.

4) Substantive Reasonableness: Presumption, Deference, and No Reweighing

On substantive reasonableness, the court emphasized: (i) within-Guidelines sentences carry a presumption of reasonableness (United States v. Alapizco-Valenzuela), (ii) district courts are better positioned to assess the import of facts under § 3553(a) (United States v. Rocha), and (iii) appellate courts do not reweigh arguments already presented (United States v. Budder; United States v. Lawless).

The panel credited the district court’s stated rationale: prolonged conduct, disregard of repeated legal/accounting warnings, large tax loss, need for deterrence and respect for law, and rejection of “victimless” framing. Ulibarri’s mitigating points (reputation harm, restitution timing, claimed disparity, and the deterrent effect of conviction alone) were acknowledged as argued below; the appellate court treated them as invitations to re-balance factors, not as demonstrations of unreasonableness.

Impact

  • Broader relevant-conduct reach in tax cases: The decision reinforces that uncharged tax-year losses will be included where the taxpayer continues the same evasive mechanism, even if the later year is framed differently (e.g., failure to file versus affirmative evasion). In practice, continuation after a target letter may strengthen the “same course of conduct” inference.
  • Guidelines proxy method is resilient on appeal: By affirming a conservative, bank-verified approach and a standardized estimate under § 2T1.1(c)(2)(A), the opinion signals that defendants challenging tax-loss estimates must supply concrete alternative data, especially for deductions/expenses.
  • Purchased schemes still trigger “sophisticated means”: The court’s reliance on the “involved” language, plus United States v. Lewis, makes clear that a defendant cannot avoid the enhancement by portraying himself as merely a client of a promoter; what matters is the complexity of execution/concealment actually used.
  • Deterrence emphasis for high-income professionals: The decision underscores that tax cases are not treated as victimless and that general deterrence can justify custodial sentences even for first-time offenders with strong community ties, particularly where the conduct is prolonged and high-loss.

Complex Concepts Simplified

  • Procedural vs. substantive reasonableness: “Procedural” asks whether the court used the correct steps (proper Guidelines calculations, correct facts, adequate explanation). “Substantive” asks whether the final length is too long/short given § 3553(a).
  • Relevant conduct (uncharged conduct): Sentencing can include conduct beyond the counts of conviction if it is part of the same overall pattern or scheme. In tax cases, the Guidelines lean toward aggregating multiple years unless “clearly unrelated.”
  • Tax loss vs. actual tax due: “Tax loss” under the Guidelines is a sentencing measure that can be estimated using standardized percentages when precise figures are unavailable (e.g., no return filed). It is not necessarily the final civil tax liability.
  • “Sophisticated means” enhancement: This is not limited to genius-level planning; it applies when the method of execution or concealment is especially intricate—commonly indicated by layered entities, nominee actors, shell structures, and steps designed to impede detection.
  • Presumption of reasonableness (within-Guidelines): If the sentence falls inside the advisory range, the appellate court starts from the assumption it is reasonable; the defendant must show why it is still unreasonable under § 3553(a).

Conclusion

United States v. Ulibarri solidifies three practical rules for federal tax sentencing in the Tenth Circuit: (1) uncharged tax-year loss will be aggregated when the defendant continues the same evasive scheme and the later conduct is not “clearly unrelated”; (2) district courts may rely on conservative, Guidelines-sanctioned “reasonable estimates” of tax loss when returns are missing and the defendant does not provide better data; and (3) “sophisticated means” applies to layered trust/entity concealment even if the defendant purchased the scheme from a promoter rather than inventing it. The opinion also reinforces the appellate posture on § 3553(a): within-Guidelines sentences receive strong deference, and disagreement with the district court’s weighing of mitigation is not, by itself, reversible error.