United States v. Abramson

1

UNITED STATES OF AMERICA, v. MICHAEL ABRAMSON.

No. 18 CR 681

United States District Court, N.D. Illinois, Eastern Division

May 23, 2023

MEMORANDUM OPINION AND ORDER

Virginia M. Kendall United States District Judge

The United States charged Defendant Michael Abramson with thirteen counts of filing false tax returns in violation of 26 U.S.C. § 7206(2). (Dkt. 1). A jury trial was held but the jury was unable to reach a verdict. (Dkt. 153; Dkt 164 at 1542-43). Abramson moves for judgment of acquittal following his trial. (Dkt. 162). For the following reasons the motion is denied. [162]

Background

The indictment charges Michael Abramson with thirteen counts of making false statements in corporate and individual tax filings, in violation of 26 U.S.C. § 7206(1). (Dkt. 1). Counts 1, 2, 11, and 13 charge Abramson with making false statements on his personal income tax returns for tax years 2011 through 2014. (Id. at 5-6, 15, 17). Counts 3-10 and 12 charge him with making false statements on amended or original corporate tax returns for his business Leasing Employment Services for tax years 2006 through 2014. (Id. at 7-14, 16).

Abramson's jury trial began on January 30, 2023. (Dkt. 146). After the government rested its case on February 6, Abramson moved under Federal Rule of Criminal Procedure 29(a) for a judgment of acquittal on Counts 3 through 9 of the indictment. (Dkt. 164 at 931-36). The Court denied the motion. (Id. at 936). Abramson also moved for a judgment of acquittal on Counts 11 and 13, which the Court likewise denied. (Id. at 937).

The jury began deliberating on February 9, and on February 10, it announced that it could not reach a verdict. (Dkt. 153; Dkt. 164 at 1542-43). The Court declared a mistrial and discharged the jury. (Dkt. 164 at 1545; Dkt. 154). Abramson's retrial is set for February 5, 2024. (Dkt. 168). Abramson now moves under Federal Rule of Criminal Procedure 29(c) for judgment of acquittal on all counts of the indictment. (Dkt. 162).

Legal Standard

“A judgment of acquittal must be granted when the ‘evidence is insufficient to sustain a conviction.'” United States v. Filer, 56 F.4th 421, 425 (7th Cir. 2022) (citing United States v. Jones, 713 F.3d 336, 339-40 (7th Cir. 2013), quoting Fed. R. Crim. P. 29(a) & (c)). Applying Rule 29, the Court asks “whether, viewing the evidence in the light most favorable to the prosecution, ‘any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.'” Id. (citing Jones, 713 F.3d at 340, quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979)). “This is a high, nearly insurmountable hurdle,” but “the height of the hurdle depends directly on the strength of the government's evidence.” Id. (first quoting United States v. Armbruster, 48 F.4th 527, 531 (7th Cir. 2022), then quoting United States v. Moreno, 922 F.3d 787, 793 (7th Cir. 2019)).

Discussion

To convict a person for filing a false tax return in violation of 26 U.S.C. § 7206(1), the government must prove each of the following elements beyond a reasonable doubt: (1) the defendant prepared or caused someone to prepare an income tax return; (2) the income tax return was false as to a material matter, as charged in the Count; (3) the defendant signed the income tax return, which contained a written declaration that it was made under penalties of perjury; (4) the defendant acted willfully, that is, he knew that he had a legal duty to file a truthful tax return, but when he signed the return, he did not believe it was truthful as to a material matter; and (5) the defendant filed or caused someone to file the income tax return with the Internal Revenue Service (IRS). Seventh Circuit Pattern Criminal Jury Instructions, 26 U.S.C. § 7206(1) Elements (2020 ed.); see also United States v. Pree, 408 F.3d 855, 857 (7th Cir. 2005).

Abramson does not contest the sufficiency of the government's evidence on the first, third, or fifth elements. As to the second element, Abramson argues that the government failed to prove beyond a reasonable doubt that either the corporate or the personal tax returns contained material false statements. Specifically, for Counts 3-10 and 12, he contends that the government failed to prove that the corporate tax returns reported (1) false commission payments to Jerilyn Totani, and (2) a “Loan Receivable - JT” that was not a loan. Further, for Counts 1, 2, 11, and 13, he argues that the government failed to prove that Abramson underreported his income on his personal tax returns. Finally, as to the fourth element, he claims that the government failed to prove that Abramson acted willfully as to any false statements made in any corporate or personal tax returns on all counts.

According to the government's theory of the case, Abramson used his company-Eastern Advisors, Inc.-to funnel income to his girlfriend, Jerilyn Totani, both to hide their relationship from his wife and to avoid paying taxes on that income. The government argued at trial that Abramson invented a sham story that Totani worked for Eastern Advisors. The payments from Eastern Advisors to her were neither commissions that she had earned nor loans from the company. Totani did not bring Eastern Advisors the opportunity to make a brokerage deal between the Village of Rosemont and Outfront Media to lease billboard advertising space, nor did she work from 2004 through 2014 taking pictures of the billboards as proof of performance for Eastern Advisors. Further, the payments to Totani reported as loans-and, thus, corporate assets of Eastern Advisors-were not truly loans. Per the government, Abramson's representations about Eastern Advisors' corporate deductions and assets reported on original and amended corporate tax returns (filed as consolidated returns with Leasing Employment Services) were false. They were also material to the IRS's ability to audit the company. Moreover, the payments to Totani were, in fact, corporate distributions to Abramson and thus personal income, but they were not reported as such on his personal income taxes. He therefore paid less in taxes than he should have.

A. Government's Evidence

Relationship Between Abramson and Totani

Totani testified at trial that she met Abramson in 1995 when she was an exotic dancer at a gentleman's club. (Dkt. 164 at 245). They began a romantic relationship although Abramson was married. (Id. at 246-48). At the beginning of their relationship, Abramson regularly gave her between $300 and $500 per week in cash. (Id. at 249). Totani wanted to stop dancing and asked him to support her financially, which he agreed to do. (Id. at 249-50). She also wanted to be closer to him in Chicago, so Abramson rented an apartment for her at $1,200 per month at 1122 North Clark Street. (Id. at 250-52). When the building converted to condominiums, he bought her unit. (Id. at 264-65).

Richard Forcone, a business acquaintance of Abramson's, testified that Abramson had called and asked him for a favor: to put a condo in Chicago in his name. (Dkt. 164 at 225-26). According to Forcone, Abramson wanted to keep it off his taxes and hide it from his wife because his girlfriend was going to live there. (Dkt. 164 at 226-27). IRS Special Agent Jason Gibson testified that Totani understood that her condo was in Forcone's name so that Abramson's family would not find out. (Id. at 723). And Kelly Beyer Wyzykowski of the Chicago Title Land Trust Company likewise described how the Clark Street condo was put in a land trust, with Forcone as both power-of-direction holder and beneficiary of the trust. (Dkt. 164 at 2016-10 (citing GX 410)).

Totani also described how Abramson continued providing for her while she lived in the Clark Street condo. In addition to paying for rent and later purchasing it, he covered all utilities, gave her $500 in cash per week, renovated the condo, and purchased several luxury vehicles for her, including a bright yellow Ferrari, a Corvette, a Porsche, and a motorcycle. (Dkt. 164 at 25758, 267, 269-72, 281-83, 286). She testified that Abramson paid for her credit card bills, which included payments for travel to the Virgin Islands, California, Law Vegas, and for stays at resorts, spas treatments, restaurants, and shopping excursions. (Id. at 289-99). Totani never expected to have to pay back what she spent. (Id. at 289). She never executed a written loan agreement nor had any documents evidencing an obligation to repay either Abramson or his companies. (Id. at 310).

Agent Gibson testified that Totani received payments from Eastern Advisors toward her American Express credit card and Chase bank account, and the Court admitted several related exhibits into evidence. (Dkt. 164 at 75-79 (citing GX 200A-200G); id. at 102-06). Totani also received payments for her doctors' bills, insurance, and other expenses both directly from Abramson as well as from his companies, Eastern Advisors and PayTech. (Id. at 79). Jill Roth, the bookkeeper for Abramson's companies from 2008 through 2014, corroborated this testimony, and the Court received into evidence emails between Roth and Abramson in which he directed her to pay Totani's expenses through Eastern Advisors. (Id. at 394, 426-31 (citing GX 600-602)). Roth booked payments to Totani's American Express cards under the JT Loan Account in Eastern's records at Abramson's direction. (Id. at 421-22).

Totani maintained a sexual relationship with Abramson until 2014, and she is still close with him. (Dkt. 164 at 247-48). She described Abramson as her “best friend” and said that she would die for him. (Dkt. 164 at 1143-44).

Business Deal Between Outfront Media and Eastern Advisors

Ron Ipjian testified that around 2000, his company Outfront Media^[1]retained Abramson when they were considering...