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Despite Supreme Court win in tax case, Buffalo businessman may be looking at prison

If a man takes his case all the way to the U.S. Supreme Court and wins, you might assume his legal woes are behind him.

Not so. Just ask Carlo J. Marinello III.

Marinello, the Buffalo businessman who made history by successfully challenging his income tax conviction before the nation's highest court, is facing a possible return to prison.

Even though his sole felony conviction was vacated, federal prosecutors want the former small-business owner to finish his three-year prison term.

Now 72, Marinello has already spent 21 months in custody.

"Unquestionably, Mr. Marinello has served more time than he was originally sentenced to," defense lawyer Joseph M. LaTona said in court papers.

LaTona said his client's three-year sentence stemmed from the felony conviction that was overturned and noted that each of his misdemeanor convictions for tax evasion carried one-year concurrent sentences.

Prosecutors point out that Marinello has a long history of avoiding taxes and, during his trial, was found guilty of eight separate counts of failing to file tax returns.

Those misdemeanor convictions remain part of his record.

"This entire case has always been about greed and the defendant's refusal to pay his fair share of income taxes," Assistant U.S. Attorney Russell J. Ippolito said in court papers.

Lawyers on both sides declined to comment but their positions on Marinello's resentencing by U.S. District Judge William M. Skretny next month is spelled out clearly in court papers.

The government's push to send the former courier company owner back to prison follows his  Supreme Court victory earlier this year.

His legal journey is a rarity among federal cases in Buffalo in that his lawyers succeeded in convincing the high court to hear his case. And then to win made it even more unusual.

In its 7-2 decision, the court found that the criminal tax law that led to Marinello's conviction was overly broad and subject to potential abuse by prosecutors.

"To rely on prosecutorial discretion to narrow the otherwise wide-ranging scope of a criminal statute’s general language places too much power in the prosecutor’s hands," Justice Stephen G. Breyer wrote in the majority opinion.

When the high court ruled, Skretny released Marinello, but prosecutors eventually moved to send him back to prison.

They pointed to his eight convictions and a history of never paying income taxes even though his company earned hundreds of thousands of dollars. They also cite his failed promise to pay $351,763 in restitution to the Internal Revenue Service.

"Essentially, the defendant has not paid his fair share of taxes his entire adult life," Ippolito said in court papers.

For Marinello, the 21 months he spent in prison is more than enough punishment. He also thinks it's more than what he would have received if convicted of the misdemeanor charges and nothing else.

In court papers, he also argues that a second sentencing would violate his constitutional protection against a second prosecution for the same offense.

"It is the defense position that any endeavor to sentence Mr. Marinello to additional incarceration would violate the double jeopardy clause," LaTona said in court papers.


Judges warn of 'prosecutorial abuse' if Buffalo IRS ruling stands

Following a jury trial in 2014 that focused on Marinello's poor record keeping, he was found guilty of obstructing the IRS.

Even Marinello admits he spent little, if any, time keeping records or filing tax returns. The former small business owner also acknowledges destroying bank statements and commingling business income and personal expenses.

From Day One, he said his focus was on building his company, Express Courier Group/Buffalo Inc.

The Supreme Court's decison reversed the lower court rulings that went against Marinello, including the Second Circuit Court of Appeals ruling upholding his conviction.

In that appeal, eight of the court's 10 judges agreed with the jury verdict, but the two who dissented warned of the potential consequences to taxpayers.

"If this is the law, no one is safe," said U.S. Circuit Judge Dennis Jacobs. “At some point, prosecutors must encounter boundaries to discretion, so that no American prosecutor can say, ‘Show me the man and I’ll find you the crime.' "

In the end, the Supreme Court agreed with Jacobs and Marinello.


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