The Federal Sentencing Guidelines Treat All Tax Crimes the Same.

 

Title 26 of the United States Code is commonly referred to as the Internal Revenue Code and contains various income tax crimes.

Section 7201 defines income tax evasion, a 5 year felony. Section 7203 defines wilful failure to file or pay over a tax, a misdemeanor. Section 7206 defines the crime for wilfully filing fraudulent returns, a 3 year felony.  The federal sentencing guidelines  make no distinction for the nature of the tax violation. Instead, the guidelines are driven by the amount of the tax loss.  The sentence cannot be more than the statutory maximum provided for the offense. However, this cap can be circumvented by the Court when there has been a conviction on more than one count.

 The Court may order that the sentence for two or more counts be served consecutively as opposed to concurrently.  This means a person convicted of 3 tax evasion counts could be sentenced to less time than a person convicted of 3 misdemeanor counts if the tax loss is greater and the Court orders that the sentences be served consecutively. As a result, in a case with several felony and several misdemeanor tax counts, there is a very real possibility that a taxpayer could go to trial and be found not guilty on the felony counts and still be sentenced to the same amount of time on the misdemeanor counts upon which he was convicted. Therefore, the best criminal tax lawyers realize that requesting so-called lesser included offenses may create a problem for the taxpayer.  

The following case discusses the issue of calculating tax loss for sentencing purposes. As shown below state taxes may be included in the calculation and cash payments in certain circumstances may be disallowed.

United States v. Sanchez, 2016 U.S. Dist. LEXIS 17132, 117 A.F.T.R.2d (RIA) 866 (E.D. N.Y. 2016)
CaseNo.13-CR-655 (SJ) (SMG)

Opinion by: STEVEN M. GOLD  United States Magistrate Judge.

REPORT & RECOMMENDATION

INTRODUCTION

On November 20, 2013, defendant Javier Sanchez was charged in a ten-count indictment with making and subscribing four false corporate tax returns and six individual tax returns ("the returns"), all in violation of 26 U.S.C. § 7206(1). Counts One through Four of the indictment charged defendant with making and subscribing false corporate tax returns for the years 2006 through 2009 on behalf of Imperial Glassworks, Inc. ("Imperial"), a company he owned and operated that installed glass at construction sites. Counts Five through Ten charged defendant with making and subscribing false individual tax returns for the years 2004 through 2009.

On January 15, 2015, defendant Sanchez offered pleas of guilty to each of the ten charges in the indictment.  During the course of tendering his pleas of guilty, Sanchez acknowledged that he was the sole shareholder of Imperial and that he reviewed and signed the returns despite knowing that they under-reported the gross income that he and Imperial received during the tax years for which they were filed.

The pending dispute between Sanchez and the government concerns how the amount of the tax loss caused by defendant's offenses should be calculated. The tax loss is relevant to determining the defendant's sentencing guideline range.  The Magistrate Court made the following recommendations with respect to the manner in which the tax loss should be determined.


FACTS

The indictment identifies defendant Sanchez as the owner, operator, and sole shareholder of Imperial, a New York S-corporation. Indictment  As the indictment alleges, an S-corporation is a "flow—through entity," meaning that, while the S-corporation itself is not required to pay taxes, its shareholders are required to report the corporation's taxable income on their individual returns. Accordingly, the returns filed on behalf of Imperial that form the basis of Counts One through Four of the indictment are informational returns, and there is no federal tax loss associated directly with them. The parties' dispute thus primarily concerns the amount of taxes Sanchez would have been required to pay  had he accurately reported his income, including the income that "flowed through" to him from Imperial.

The indictment alleges, and the hearing testimony confirmed, that Imperial earned substantial income from 2004 through 2009, and that much of that income was paid to Imperial by check. Although Imperial had a bank account, defendant Sanchez converted many of the checks payable to Imperial to cash by using a check-cashing establishment.  Imperial and Sanchez employed an accountant to prepare the tax returns listed in the indictment.  The accountant prepared the returns based primarily upon Imperial's bank records.  Because, as noted above, many of the checks payable to Imperial were cashed, the proceeds of those checks were not reflected in Imperial's bank records or accounted for when the tax returns were prepared.  Based on these circumstances, the indictment alleges that defendant hid a substantial amount of Imperial's gross receipts from his accountant.

Defendant Sanchez  and the government have stipulated that, during the period between January 1, 2004 and December 31, 2009, defendant's corporation, Imperial, had $4,822,334.00 in gross receipts that were converted to cash.  In addition, the government has agreed that two cash payments—one for $140,225.34 in 2007 and another for $70,378.00 in 2008—were in fact made to "outside subcontractors" and are appropriately deducted from the $4,822,334.00 in cash when determining the amount of defendant's unreported income and calculating the tax loss.

Initially, the parties disagree over the appropriate method for calculating the tax loss. The remaining issues dividing the parties include (1) whether cash deposits made by defendant into Imperial's bank account should be deducted from the government's calculation of defendant's and Imperial's undeclared income; (2) whether New York State and New York City taxes due on the undeclared income should be included in the tax loss computation; and (3) whether deductions should be permitted for certain labor expenses and check-cashing fees that were not included on the underlying tax returns. The Court addressed each of these issues below.


DISCUSSION

I. Calculation Method for Determining Tax Loss

The tax loss for offenses involving tax evasion or fraudulent or false documents is "the total amount of loss that was the object of the offense (i.e., the loss that would have resulted had the offense been successfully completed)." United States Sentencing Commission, Guidelines Manual, § 2T1.1(c)(1) (Nov. 2009). Tax loss is meant to reflect the revenue loss to the government resulting from defendant's conduct. United States v. Gordon, 291 F.3d 181, 187 (2d Cir. 2002). The notes following Section 2T1.1(c) state that where, as here, "the offense involved filing a tax return in which the gross income was underreported, the tax loss shall be treated as equal to 28% of the unreported gross income . . . unless a more accurate determination of the tax loss can be made." USSG § 2T1.1(c)(1)(A).

Both the government and Sanchez called upon experts to calculate the tax loss amount in this case. The government's expert, IRS Special Agent Hal Sherry, reconstructed Sanchez's federal and New York State income tax returns, and Imperial's New York City corporate tax returns, in their entirety, a process that included adjusting defendant's deductions, net operating loss, and income accordingly for each year at issue.  Defendant's expert, Craig Weiner, a forensic accountant, proposed at the hearing that defendant's federal income tax liability should be determined by multiplying his unreported taxable income by 28%, as the Guidelines note quoted above suggests is appropriate when a more accurate calculation cannot be made.

Although Sanchez contends that any state and city taxes due should not be included in the tax loss computation here, defendant's expert also described methods for calculating defendant's state and city tax liabilities.  Mr. Weiner proposed calculating defendant's New York State income tax liability by applying a 6.85% tax rate to his additional taxable income.  Mr. Weiner further opined that defendant's New York City income tax liability could be calculated by applying New York City's maximum tax rate of 3.648% to his additional taxable income for 2004, the only year within the relevant period during which defendant concedes he was a New York City resident. .

With the exception of the matters in dispute addressed below, defendant Sanchez does not contend that the government's approach to recalculating his tax liability is inaccurate or less reliable than the results achieved by applying a straight 28% tax rate to the income defendant failed to report. Accordingly, and because the notes following USSG § 2T1.1(c) state that the 28% method should be applied only when a more accurate alternative is unavailable,   I conclude that the government's reconstruction of defendant's tax returns "by starting with the federal income tax returns the defendant did file" and "making adjustments to reflect the additional unreported income and related credits and deductions that would have been applied had the defendant truthfully reported his cash income" is the most appropriate method for determining the amount of the tax loss.

II. Amount of Unreported Income

Defendant Sanchez contends that the government has overstated the amount of income he failed to report. More specifically, Sanchez points out that he caused a substantial amount of cash—between $500,000 and $600,000—to be deposited into Imperial's corporate bank account, and that the only source of cash he had was the proceeds of the Imperial checks he presented to check-cashing facilities.

 In fact, Sanchez testified at the hearing that his practice was to deposit cash generated by converting checks into Imperial's bank account from time to time.  Defendant further claims, and the government agrees, that any cash deposited into  Imperial's account was reported as income on Imperial's original tax returns.

The government generally bears the burden of proving facts related to sentencing, including the amount of a defendant's unreported income, by a preponderance of the evidence. See United States v. Martinez-Rios, 143 F.3d 662, 677 (2d Cir. 1998). The government has acknowledged as much. Day 1 Tr. 6:12-22. The government, however, has failed to present any evidence indicating that the cash deposited by Sanchez into Imperial's bank account came from any source other than checks payable to Imperial and converted to cash at one or more check-cashing establishments.

The money deposited into Imperial's corporate bank account was reported as income on defendant's tax returns by defendant's accountant in each of the years at issue.  Because the government has failed to establish that the cash deposits into the Imperial bank account came from a source other than  checks payable to Imperial, I respectfully recommend that the deposited cash be excluded from defendant's unreported income and the ensuing tax loss calculation.


III. Inclusion of New York State and New York City Taxes in Calculation of Tax Loss

A. State and City Personal Income Taxes

The parties dispute whether the tax loss calculation should include taxes owed to New York State and New York City on the income defendant failed to report. The government contends that defendant failed to pay income taxes due on the unreported income to New York State from 2004 through 2009 and to New York City from 2004 through 2007, and that these amounts due should be included in the tax loss calculation.

 In support of its position, the government relies on the commentary to the relevant Sentencing Guideline. The commentary states that, in determining the total tax loss attributable to an offense, "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." USSG § 2T1.1, comment. (n. 2) (emphasis added). The government points as well to Second Circuit decisions including amounts owed to state and local tax authorities in the computation of tax loss. See United States v. White, 571 Fed. App'x 20, 25 (2d Cir. 2014); United States v. Elia, 374 Fed. App'x 184, 186 (2d Cir. 2010); United States v. Fitzgerald, 232 F.3d 315, 321 (2d Cir. 2000).

Defendant attempts to distinguish the cases cited by the government by pointing out that those cases involved tax evasion charges, whereas Sanchez pleaded guilty to making and subscribing false tax returns. The sentencing guidelines themselves, though, undermine defendant's contention that there is a material difference between tax evasion and filing false returns when it comes to calculating the ensuing tax loss. The governing guideline, which includes special instructions for calculating tax loss, is entitled "Tax Evasion; Willful Failure to File Return, Supply Information, or Pay Tax; Fraudulent or False Returns, Statements or Other Documents," and applies to both Sections 7206 and 7201 of Title 26. USSG App. A. The Guidelines thus treat both offenses in the same way. USSG § 2T1.1. Accordingly, the holdings in tax evasion cases that state and city tax liabilities are appropriately included when computing tax loss apply to false filing cases like this one as well.

Defendant also argues that state and local taxes should not be included in tax loss because  the Guidelines state that, in cases where income is underreported, tax loss "shall be treated as equal to 28% of the unreported gross income" and make no reference to including any state or local tax liability. USSG § 2T1.1(c)(1)(A). However, as noted above, the full text of the guideline note cited by defendant provides that the 28% formula applies only when "a more accurate determination of the tax loss" cannot be made. Here, both the federal tax loss and the loss under state and local law can be determined, and the 28% rule therefore does not apply.

Reference to other provisions of the Guidelines provides further support for including state and local taxes in the tax loss amount. As noted above, the application notes for Guideline § 2T1.1 provide for the inclusion of state and local taxes due in that they direct that, "[i]n determining the total tax loss attributable to the offense. . . , 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." USSG § 2T1.1, comment. (n. 2).

 Other Guidelines provisions are consistent in this regard. For example, the Guidelines provide, in a different context,  that "a defendant's failure to file tax returns in three consecutive years appropriately would be considered as part of the same course of conduct because such returns are only required at yearly intervals." USSG § 1B1.3, comment. (n. 9(B)). Logically, then, the filing of a state and local return within the same year as a federal return, and failing on that state and local return to report the same income omitted from the federal return, would be part of the same course of conduct as making and subscribing the false federal tax return. Here, the defendant underreported his income on his federal and state returns, and on Imperial's New York City returns, for every year from 2004 through 2009.  The similarity and repetition of the offenses support treating defendant's underpayment of state and local taxes, at a minimum, as part of the same course of conduct as defendant's federal offenses. In any event, filing state and city tax returns that were false for the same reason as the returns listed in the indictment is clearly "conduct violating the tax laws" and not "clearly unrelated" to the filing of false federal tax returns. For all these  reasons, I conclude that defendant's outstanding New York State and New York City income tax liability is appropriately included in the tax loss.

It is undisputed that defendant was a New York State resident during the entire relevant period. Accordingly, for the reasons stated above, any unpaid New York State income taxes for 2004 through 2009 are appropriately included in the tax loss. Defendant claims, however, that he changed his residence in 2005 from Queens to an upstate location outside of New York City and that he therefore owes income taxes to New York City only for 2004.  Defendant's New York State tax returns belie his contention that he moved out of New York City in 2005. Taxpayers who live in New York City report their residence and taxable income on their New York State tax returns.

 Defendant's New York State returns for 2004 through 2007 report that he was a New York City resident during all twelve months of the year covered by the return.  By contrast, defendant indicated on his 2008 New York State income tax return that he was no longer a New York City resident.  The only evidence that defendant moved from New  York City in 2005 rather than 2008 is his own self-serving testimony. Indeed, although defendant has known for some time that the government contends he was a New York City resident through 2007, he has failed to submit any proof—for example, utility bills, school records, or toll receipts—demonstrating that he resided in upstate New York beginning in 2005. I therefore conclude that New York City income taxes on defendant's unreported income for 2004 through 2007 are properly included in the calculation of the tax loss.

B. New York City Corporate Taxes

Defendant operated his business out of a warehouse in New York City.  New York City does not recognize S-corporations as a corporate form. See Administrative Code of the City of New York ("Admin. Code") §§ 11-602(8)(ii), 11-603(1); NYC Fin. Memo. [17]  No. 99-3 (October 21, 1999). As a result, New York City, for tax purposes, treats S-corporations as if they were C-corporations, requiring that they as well as their shareholders pay income taxes.

As discussed above, in calculating tax loss, a court is to consider "all conduct violating the tax laws" that constitutes the same course of conduct or common scheme or plan as the offense, unless it is clearly unrelated. USSG § 2T1.1, comment. (n. 2). As a result of defendant's offense, he underreported not only his own income, but also income that Imperial was obliged to report on its New York City Corporate tax returns for 2004 through 2009.  Just as submitting two false individual income tax returns to two sovereigns omitting the same income during the same calendar year constitutes a common scheme or plan, so too does submitting individual and corporate income tax returns that fail to report the same income. See USSG § 1B1.3, comment. (n. 9(B)). Therefore, Imperial's unpaid New York City corporate income taxes are properly included in the tax loss calculation.


IV. Deductions for Labor Expenses and Check-Cashing Fees

Defendant seeks to deduct cash he paid to people he  employed and fees charged by the check-cashing establishment he used.  While the government agrees that defendant may claim certain previously undeclared legitimate deductions, it contends that defendant's cash payments to workers and check-cashing fees are not legitimate deductions and should not be permitted.

A. "Off the Books" Payroll

The largest deduction defendant seeks is for payments he made to workers from 2004 through 2009 using cash he generated by cashing Imperial's checks. Defendant acknowledged during the hearing that he hired undocumented workers and paid them in cash.  He further acknowledged that he did not withhold taxes from the amounts he paid his employees nor, to the extent he claims they were independent contractors, did he file 1099 forms reflecting the money he paid them.  Although defendant seems to argue in his post-hearing submissions that the cash payments he made to undocumented workers may have been lawful, he acknowledged repeatedly during his hearing testimony that he knew his payroll practices were improper and unlawful. And, of course, they plainly were. First, it was unlawful for Sanchez to hire non-citizens knowing they were "unauthorized . . . with respect to such employment." 8 U.S.C. § 1324a(a)(1). Second, it was unlawful for Sanchez not to withhold taxes from the cash he paid his workers, assuming they were employees and not independent contractors. 26 U.S.C. § 3402(a); see also United States v. Meneilly, 78 F.Supp.2d 95, 105 (E.D.N.Y. 1999). Finally, even if the workers Sanchez hired were independent contractors and not employees, it was unlawful for Sanchez not to make a return setting forth the amounts he paid them. 26 U.S.C. § 6041A(a); see also Atlantic Coast Masonry, Inc. v. C.I.R., T.C. Memo 2012-233, 104 T.C.M. (CCH) 895, 2012 WL 3288210, at *8 (T.C. 2012). A willful failure to withhold and pay over taxes, or to make a required return, is punishable as a crime. 26 U.S.C. §§ 7202, 7203.

Defendant Sanchez clearly would not be permitted to deduct cash he paid "off the books" to undocumented workers under the Guidelines that have been in effect since November 1, 2013. As of that date, the commentary to § 2T1.1 has provided as follows:

    3. Unclaimed Credits, Deductions, and Exemptions.—In determining the tax loss, the court should account for the standard deduction and personal and dependent exemptions to which the defendant was entitled. In addition, the court should account for  any unclaimed credit, deduction, or exemption that is needed to ensure a reasonable estimate of the tax loss, but only to the extent that (A) the credit, deduction, or exemption was related to the tax offense and could have been claimed at the time the tax offense was committed; (B) the credit, deduction, or exemption is reasonably and practicably ascertainable; and (C) the defendant presents information to support the credit, deduction, or exemption sufficiently in advance of sentencing to provide an adequate opportunity to evaluate whether it has sufficient indicia of reliability to support its probable accuracy.

    However, the court shall not account for payments to third parties made in a manner that encouraged or facilitated a separate violation of law (e.g., 'under the table' payments to employees or expenses incurred to obstruct justice).

USSG § 2T1.1, comment. (n. 3) (Nov. 2013) (emphasis added). Sanchez contends that this Guideline commentary announced a new rule regarding "under the table" payments and that, because the rule post-dates his charged conduct, it should not apply to his case.

Sanchez is correct to the extent that, as noted above, "where application of the Guidelines in effect at sentencing would result in a more severe sentence than the version in effect at the time of the commission of the offense, the Ex Post Facto Clause . . . requires use of the earlier version of the Guidelines." United States v. Fitzgerald, 232 F.3d 315, 318-19 (2d Cir. 2000). Contrary to his argument, though, the rule announced by the commentary was not a new one. First, the statutes cited above rendering defendant's payroll practices unlawful were in effect at all times relevant to the offenses charged in the indictment. Moreover, in setting forth the reasons for the 2013 amendment, the Commission clearly explained that the purpose of the amendment was to resolve a split among Circuit Courts of Appeal over whether legitimate but undeclared deductions may be considered when calculating tax loss:

    This amendment responds to a circuit conflict regarding whether a sentencing court, in calculating tax loss as defined in § 2T1.1 (Tax Evasion; Willful Failure to File Return, Supply Information, or Pay Tax; Fraudulent or False Returns, Statements, or Other Documents), may consider previously unclaimed credits, deductions, and exemptions that the defendant legitimately could have claimed if he or she had filed an accurate tax return.

United States Sentencing Commission, Guidelines Manual Supplement to Appendix C, Amendment 774, at 41 (Nov. 2013). Neither the commentary to the Guidelines nor any Circuit Court had previously suggested that illegitimate expenses, such as unreported cash payments to workers, could be deducted. The Commission also explicitly set forth its rationale for precluding consideration of payments to third parties made in a manner that encourages unlawful conduct, explaining as a matter of common sense that such payments "result in additional harm to the tax system and the legal system as a whole." Id. at 43. There is nothing novel or unexpected about such straightforward reasoning.

Finally, Second Circuit precedent applicable at the time of defendant's criminal conduct at least suggested that illegitimate payments could not be deducted when calculating tax loss. In United States v. Rhodis, 58 F. App'x 527 (2d Cir. 2003), defendant Rhodis was convicted of conspiracy and, like Sanchez, filing false personal and corporate tax returns. On appeal, Rhodis challenged the district court's refusal to allow certain deductions when calculating tax loss. The Court noted that the Guidelines "afford the defendant the benefit of legitimate  deductions," and remanded for clarification after concluding that "the record [was] unclear as to whether the District Court considered the deductions illegitimate or failed to consider them at all." Id. at 530 (emphasis added). Had the Second Circuit determined that illegitimate deductions were appropriately considered when calculating tax loss, no clarification would have been required; the deductions would have been allowed. The clear import of the holding in Rhodis is that, as early as 2003, the law in the Second Circuit precluded consideration of illegitimate deductions when calculating tax loss.

Sanchez argues that the holding in United States v. Hoskins, 654 F.3d 1086 (10th Cir. 2011), supports allowing deductions for off the books payments.  Defendant's reliance on Hoskins is misplaced. First, as noted in the 2013 Guidelines commentary quoted above, Hoskins was decided at a time when Circuit Courts were divided over whether any deductions not declared on the false returns that were the subject of charges could be considered at all. A decision of the Tenth Circuit, particularly at a time when Circuit Courts were split, is of limited precedential value. Moreover, Hoskins does not explicitly hold that unreported, off  the books cash payments to workers are appropriately deducted when calculating tax loss.

The Court in Hoskins did propose that even expenses paid in cash might be properly considered if the taxpayer maintained "immaculate business records." 654 F.3d at 1095. The discussion of this possibility was mere dicta, however, because the Court went on to affirm the District Court's acceptance of the prosecution's tax loss calculation. Id. at 1097. In any event, the facts here bear little resemblance to the immaculate record-keeping hypothesized by the Court in Hoskins; in this case, it is undisputed that defendant Sanchez paid undocumented workers in cash and did not withhold taxes from or report those payments, either as payments to independent contractors on a Form 1099 or as payments to employees on a Form W-2.

For all these reasons, I conclude that any cash payments Sanchez made to workers, whether as employees or independent contractors, are appropriately excluded when calculating the tax loss applicable in this case.

B. Check-Cashing Fees

Defendant contends that the more than $100,000 in fees he paid to convert Imperial's checks to cash were ordinary and necessary business expenses that are appropriately deducted when computing tax loss.  Sanchez claims that he relied on the services of a check-casher to generate cash to pay his employees because state law would have required him to provide his workers with paid time to cash their checks if he did not pay them in cash.

An expense may be deducted only if it is ordinary and necessary to running a taxpayer's business. 26 U.S.C. § 162(a). Defendant maintained  a corporate checking account into which he could have deposited Imperial's checks.  In addition, defendant had access to a line of credit, which provided a simple and lawful solution to any cash flow problems he may have had.  Finally, defendant Sanchez acknowledged during the hearing that he took more than one million dollars of the Imperial check proceeds he converted to cash for himself.

In sum, defendant offered no evidence to support his conclusory assertion that his bank would not allow him to cash Imperial's checks in sufficient time to pay his employees. Moreover, Sanchez paid a substantial portion of the check-cashing fees at issue to generate unreported cash for his own personal use. The obvious inference is that defendant used check-cashing establishments, as opposed to depositing Imperial's checks into its bank account, for illegitimate purposes: first, to avoid revealing the proceeds of the checks to his accountant and, in turn, to federal, state and local tax authorities, and second, to be able to pay his workers off the books with unreported cash and to pocket much of the remainder for himself. The check-cashing fees defendant paid to generate cash without depositing checks into a bank account are, therefore, neither legitimate nor ordinary and necessary business expenses. See Payne v. Commissioner of Internal Revenue, T.C. Memo 2005-130, 89 T.C. M. (CCH) 1391, 2005 WL 1277227, at *7 (T.C. 2005), aff'd, 211 F. App'x 541 (8th Cir. 2007). I accordingly conclude that the check-cashing fees should not be deducted when computing tax loss.


CONCLUSION

For the reasons stated in this Report and Recommendation, I respectfully recommend that the government's calculation method for determining the tax loss be adopted. I further recommend that (1) defendant's cash deposits to Imperial's bank account be deducted from the calculation of his and Imperial's unreported income; (2) unpaid New York State income taxes, New York City corporate taxes from 2004 to 2009, and New York City income taxes for 2004 through 2007, be included in the computation of tax loss; and (3) no deductions for labor costs or check-cashing fees be allowed. Finally, if the recommendations in this report are adopted, I further recommend that the government be called upon to recalculate the tax loss based upon the rulings set forth above, and that defendant Sanchez have an opportunity to review the government's revised calculations and challenge them before  they are accepted by the Court, but not to the extent the recalculations are based upon the recommendations made herein.

/s/ STEVEN M. GOLD United States Magistrate Judge

Brooklyn, New York January 4, 2016

Footnote

    All references are to the 2009 version of the Guidelines unless otherwise noted. Generally, a court applies the version of the Guidelines in effect at the time of sentencing. United States v. Fitzgerald, 232 F.3d 315, 318 (2d Cir. 2000). "However, where application of the Guidelines in effect at sentencing would result in a more severe sentence than the version in effect at the time of the commission of the offense, the Ex Post Facto Clause . . . requires use of the earlier version of the Guidelines." Id. at 318-19 (quoting United States v. Broderson, 67 F.3d 452, 456 (2d. Cir. 1995)). The parties appear to agree that the 2009  Guidelines are applicable here.

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