Michael Sorrentino and Marc Sorrentino Superseding Indictment Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Michael Sorrentino and Marc Sorrentino Superseding Indictment Case Study Solution

Overview

Michael Sorrentino is a Television personality who gained fame through his show “The Jersey Shore” which first appeared on MTV network. To feat acelebrity status, he and his brother Marc Sorrentino established businesses with the name of Situation Nation Inc. and MPS Entertainment LLC.

Conspiracies:

In September 2014, both the brothers were prosecuted by the government officials of United States for tax offenses. The superseding indictment claimed that the brothers did not pay all the federal taxes which should be paid on the earnings of 8.9 million earned by Michael in 2010 and 2012. Furthermore, the superseding indictment claimed that the brothers filed a false tax return to the IRS.It claimed that the return requested fraudulent business deductions, understated gross receipt, reported wrong net business income and disguised income payment made to themselves and others. Along with this, the superseding indictment also claimed that the brothers used business bank accounts for the purchase of personal assets.

Moreover, they also claimed that Michael failed to file a personal return of 2011 and hence did not pay his 2011 income tax.He also kept his cash incomes hidden and fileda false corporate return of Situation Nation.

In the US, banks are required to report to the U.S treasury of cash deposits which exceeds $10000. The rationale behind this is that the government can identify the person who proceeds the transaction and also the organization or person to whom the transaction takes place. Superseding indictment claimed that Michael made numerous cash deposits of an amount less than $10000 on the same day.

If these conspiracies proved in the court, then these brothers have to face numerous penalties such as three-year jail on the false tax return and five-year jail on the conspiracy count. On particular terms, Michael may face a10-year prison; 5 years for tax evasion and five years for structuring count. On the other hand, Marc may face 20-year jail for hindrance. Both may also face monetary penalties.

Possible steps for defense attorney to negate willfulness

Mainly conspiracies in the case are faulty tax returns, window dressing of income, failure of filing tax returns, inappropriate tax deductions, and bank payments.

Many tax returns consist of errors but all are not consider or declared as a crime. There is a slightly lower difference between criminal tax fraud and civil negligence. If a taxpayer files or reports incorrect transaction on his or her tax returns due to the advice of the accountant or in good faith, then the act will not be considered as tax crime. However, if a taxpayer undervalues its income from return deliberately, then, this will be considered as at ax crime.

The defense attorney can negate willfulness through describing that the false tax return, understatements of the income, failure to file a return and inappropriate tax deductions are due to a civil error, not a deliberate one to prove that they can give voluntary disclosures to the tax authority, which eventually describe the reasons for failure in particular areas. Along with this, to further prove that these are mistakes, the two brothers should effectively cooperate with the tax authorities. Furthermore,they should pay underpaid tax immediately as this will show that they did not make fraud with the tax authorities.

To prove that Michael did not mislead tax authorities under bank payments,he should deliberately disclose the parties with whom he undertook the transaction. Moreover, he should also describe the rationale behind numerous cash deposits which are less than $10000 to the tax authorities.................

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