April 19, 2016
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 14-cr-00245 -
Thomas M. Durkin, Judge.
Bauer, Posner, and Flaum, Circuit Judges.
and Jerlene Bickart were convicted for tax fraud for
submitting a falsified tax return supported by fabricated
1099-OID forms. The Bickarts challenge the imposition of the
sophisticated means sentencing enhancement as well as their
conditions of supervised release. For the following reasons,
we vacate the third-party notification condition of Jerlene
Bickart's supervised release and remand for resentencing.
We affirm defendants' sentences and remaining conditions
of supervised release in all other respects.
4, 2009, Jerlene Bickart, with the assistance of her husband,
Clark Bickart, prepared and filed an income tax return
containing a false income amount and a false withholding
amount. The false income and withholding amounts were
supported by nine fabricated 1099-OID forms that were
submitted separately to the Internal Revenue Service
("IRS") in April 2009. The 1099-OID forms were made
to appear as if they came from a number of major financial
institutions, when in fact, the financial institutions never
issued any income to Jerlene nor withheld any taxes from her.
Jerlene claimed the Bickarts' mortgage and credit limits
as income, and withheld that amount minus $100. On May 15,
the IRS paid Jerlene her claimed refund of $115, 412. Absent
the false income and withholding amounts, Jerlene's
refund would have been only $263.
January 2011, the IRS conducted an audit and discovered that
these financial institutions never paid income to nor
withheld taxes from Jerlene. On March 23, the IRS sent
Jerlene a bill for $217, 923 for past due taxes, penalties,
and interest, and explained that the submitted 1099-OID forms
the next four years, the Bickarts engaged in obstructive
conduct to avoid paying their tax debt. The Bickarts first
sent the IRS a 1040-V form, an IRS payment coupon, purporting
to pay the amount. As an IRS agent later explained, this form
did not constitute payment.
August 19, 2011, IRS agents interviewed the Bickarts. Jerlene
told the agents that she and Clark had prepared the tax
return and submitted the 1099-OID forms. Clark stated that he
had prepared the 1099-OID forms based on information he
obtained from a website. He claimed that he had spent over
six months preparing to file the forms.
2012, an IRS revenue officer met with Jerlene. Jerlene
claimed that the 1040-V form had satisfied the tax debt. The
revenue officer informed Jerlene that the form did not
constitute payment. After the IRS sent another bill, Jerlene
sent the bill back with a response claiming that the bill had
already been paid along with a fraudulent 1099-OID form.
Then, in July 2012, Jerlene mailed a letter to the revenue
officer with a number of baseless accusations, including that
the officer had committed mail fraud by attempting to levy
her wages. She sent an equally bizarre letter in December
2012, this time with a "fee schedule, " in which
she claimed that the revenue officer owed her 588 ounces of
silver because he had committed "Larceny by Trick
." In October 2013, Clark filed a frivolous lawsuit in
the Northern District of Illinois against the revenue officer
and his supervisor under a fake name.
1, 2014, Clark and Jerlene Bickart were indicted for
conspiring to file a false claim to defraud the government in
violation of 18 U.S.C. § 286 and for filing a false
claim in violation of 18 U.S.C. § 287.
Bickarts proceeded pro se at trial and continued their
pattern of obstructive conduct. Defendants filed motions
alleging that they were sovereign citizens. They made various
nonsensical accusations, including that "attorneys and
judges of the United States are agents of the British Crown
and answer to the [Queen] of England." Neither defendant
testified. On March 20, 2015, the jury found defendants
guilty on both counts. The Bickarts moved for acquittal, but
their motions were denied.
to sentencing, the U.S. Probation Office filed a presentence
investigation report ("PSR"). The PSR stated that
each defendant had a base offense level of 16. The PSR
applied a two-level enhancement for sophisticated means
because "defendants created and submitted false and
fictitious Forms 1099-OID in support of the 2008 tax
return." The PSR also applied a two-level enhancement
for obstruction of justice. Neither defendant had a criminal
history. Based on the total offense level of 20, the
sentencing guidelines provided for an imprisonment range of
33 to 41 months.
also recommended that both defendants serve one to three year
terms of supervised release and proposed twenty-two
conditions of supervised release, including three mandatory
conditions, eleven discretionary conditions, and eight
special conditions. The Bickarts objected to several of these
conditions prior to sentencing. The government accepted
defendants' objection related to the excessive use of
alcohol condition but disputed their objections related to
probation officer visits and third-party notification.
accepted their appointed attorneys' assistance for
sentencing. At the hearing, neither defendant objected to the
PSR's guidelines calculations, including the application
of the sophisticated means enhancement. The district court
concluded that the sophisticated means enhancement applied
"because false and fictitious Forms 1099-OIDs were
prepared and submitted in support of the 2008 return. It took
some amount of cleverness to create such documents and send
them in." The scheme "was a calculated effort to
steal money from the government." The district court
sentenced each defendant to concurrent terms of 24 months in
prison, 9 months below the guidelines range, with their terms
staggered, as well as restitution.
court also imposed a two-year term of supervised release for
each defendant. Defendants objected to two conditions at
sentencing. Defendants first objected to the thirdparty
notification condition, which requires them to notify third
parties of risks related to their criminal history when
directed by the probation office, as vague. The district
court nonetheless imposed the condition but modified it to
require the probation office to seek the district court's
approval before notifying or requiring that defendants notify
third parties. The modified condition also gives defendants
seven days to object to notification.
defendants objected to the condition permitting a probation
officer to visit them at home or at work at any reasonable
time, arguing that the condition was unnecessary and would
make it difficult to secure and retain employment upon
release. The district court overruled the objection, finding
that it would be contrary to the goals of the probation
office to do anything that would cause defendants to lose
their jobs. Defendants appeal, challenging the application of
the sophisticated means enhancement and the following
conditions of supervised release:
• Discretionary Condition #4: Seek, and work
conscientiously, at lawful employment or pursue
conscientiously a course of study or vocational training
that will equip the defendant for employment.
• Special Condition #5: Not incur new credit charges or
open additional lines of credit without the approval of a
probation officer unless the defendant is in compliance
with the financial obligations imposed by this judgment.
• Special Condition #7: Notify the court of any material
change in the defendant's economic circumstances that
might affect the defendant's ability to pay ...