United States v. Tilga (824 F. Supp. 2d 1295, 2011)

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on: (i) Defendant Carolynne Tilga’s Memorandum in Aid of Sentencing of Defendant Carolyne Tilga and Limited Objections to Presentence Report, filed October 6, 2011 (Doc. 161) (“Tilga’s Sentencing Memo.”); (ii) Defendant Michael Chandler’s Sentencing Memorandum and Request for a Reasonable Sentence, filed August 23, 2011 (Doc. 154) (“Chandler’s Sentencing Memo.”); and (iii) Government’s Sentencing Memorandum, filed October 8, 2011 (Doc. 162) (“Gov’t Sentencing Memo.”). The Court held an evidentiary hearing on October 13, 2011. The primary issues are: (i) whether the tax loss calculation should be $23,200.00 or $1,937,273.00 (United States Dollars); (ii) whether Defendants Carolynne Tilga and Michael Chandler used sophisticated means to commit the offense of conviction; (iii) whether Tilga and Chandler used special skills to commit the offense of conviction; (iv) whether Tilga should was an organizer, leader, manager, or supervisor of the criminal activity; (v) whether the Presentence Investigation Report on Carolynne Tilga (disclosed July 26, 2011) (“Tilga PSR”) should acknowledge the benefits the United States obtained from the Plea Agreement, filed January 6, 2011 (Doc. 126) (“Tilga Plea Agreement”); and (vi) whether the Tilga PSR should contain explicit recognition that the sentencing guidelines are advisory. The Court accepts the parties’ stipulated tax loss calculation, $23,300.00 (USD), and finds that the foreign tax credit may apply post-indictment. The Court also agrees with and accepts the parties’ stipulations in the Plea Agreements that neither Tilga nor Chandler’s offenses involved a special skill, an aggravating role, or obstruction of justice. The Court will sustain Tilga and Chandler’s objections to the PSRs to the extent that the PSRs are contrary to these findings. The Court finds, however, that Tilga and Chandler used sophisticated means, as defined in U.S.S.G. § 2T1.1, and will not adopt the parties’ stipulation to the contrary. The Court concludes that Tilga’s objections to the PSR’s failure to acknowledge the benefits that the Plaintiff United States of America obtained from the Plea Agreement and failure to explicitly recognize the sentencing guidelines’ advisory status are moot.

FACTUAL BACKGROUND

Tilga was born in Bronxville, New York. See Tilga PSR ¶ 51, at 22. She attended Cornell University for her undergraduate studies in Hotel Administration and graduated in 1982. See Tilga PSR ¶ 67, at 26; Tilga’s Sentencing Memo, at 6. Tilga received her Master of Business Administration from the Wharton School of Business at the University of Pennsylvania in 1986. See Tilga PSR ¶ 69, at 26; Tilga’s Sentencing Memo, at 6. In 1997, Tilga moved to Santa Fe, New Mexico. See Tilga PSR ¶ 56, at 23. She has been in a committed relationship with Chandler since 1997, and they have two children. See Tilga PSR ¶ 58, at 24.

Chandler was born in Boston, Massachusetts. See Presentence Investigation Report on Michael Chandler (disclosed July 26, 2011) (“Chandler PSR”). Chandler attended Boston College and Plymouth State University, but did not graduate from either. See Chandler PSR ¶¶ 65-66, at 21. Chandler is a “stay-at-home dad” and works for Taos Ski Academy as ski instructor. See Chandler PSR ¶ 68, at 22.

Tilga and Chandler owned and controlled various businesses, including internet service sites, from 1998 to 2006. See Tilga PSR ¶ 9, at 7. Between 1999 and 2004, Tilga owned and operated an adults-only internet dating service. See Tilga PSR ¶ 17, at 10. . Before 2002, Tilga was a partner with two Canadian businessmen, and the internet service sites were located in Canada. See Tilga PSR ¶ 17, at 10; Tilga’s Sentencing Memo, at 7. Tilga earned income from the Canadian joint venture, in which she owned a 37.5% share, as part of her trade and business between the tax years 1999 and 2004. See Tilga’s Sentencing Memo, at 7 n. 16. After 2002, Tilga expanded the company on her own, using webcam sites in addition to the standard internet dating sites with which she was working. See Tilga PSR ¶ 17, at 10.

Tilga was introduced to the Commonwealth Trust Company (“CTC”) in 1998. See Tilga PSR ¶ 16, at 9. The CTC was an organization that taught individuals how to purchase and manage Pure Trust Organizations (“PTOs”). See Tilga PSR ¶ 10, at 7. Tilga began purchasing entities from CTC around April 1998. See Tilga PSR ¶ 16, at 9; Tilga’s Sentencing Memo, at 7. Each of these entities was a “business” that controlled Tilga’s internet sites, her homes, and her vehicles. Tilga PSR ¶ 16, at 9. Between 1998 and 2003, Tilga purchased the following entities from CTC: (i) Cabernet Financial, 1998; (ii) Worldwide Communications, 1998; (iii) General Management Services, 1998; (iv) Bressingham Investments, 1998; (v) Astra Management, 1999; (vi) Vantage Global, 2001; (vii) Batavia Guild Group, 2002; (viii) Triad Universal, 2002; (ix) Alsacia Marketing Services, 2002; and (x) Enchantment Property Management, 2003. See Tilga PSR ¶ 16, at 9-10.

Tilga requested that the revenue from her Canadian business be generated to Cabernet Financial, which used an offshore trust account. See Tilga PSR ¶ 18, at 10. Tilga paid no taxes on her share of the revenues received from her Canadian business. See Tilga PSR ¶ 18, at 10; Gov’t Sentencing Memo, at 2. Tilga then transferred funds from Cabernet Financial to various other entities purchased from CTC, which were formed to allow Tilga to purchase real estate and vehicles. See Tilga PSR ¶ 18, at 10; Gov’t Sentencing Memo, at 2.

An IRS investigation revealed that Tilga and Chandler used the CTC trusts and offshore companies to purchase assets and set up new offshore accounts. See Tilga PSR ¶ 19, at 10. Between 1999 and 2004, Tilga wired nearly $8.7 million (USD) into the United States from her offshore accounts, but her tax returns usually reported less than $75,000.00 (USD) in income per year. See Tilga PSR ¶ 19, at 10. Tilga used those funds to purchase expensive real estate in New Mexico, Colorado, and Hawaii. See Tilga PSR ¶ 19, at 10-11. Chandler assisted Tilga in wiring money to and from the accounts. See Tilga PSR ¶ 22, at 13; Gov’t Sentencing Memo, at 2-3.

For the years 1999 to 2004, Tilga failed to report $5,201,064.00 (USD) in taxable income. See Tilga PSR ¶ 25, at 14. Additionally, neither Tilga nor the vast number of CTC entities that she owned filed tax returns. See Tilga PSR ¶ 26, at 14. Accordingly, the IRS calculated the additional taxes due and owing for those years was $1,937,272.00 (USD). See Tilga PSR ¶26, at 15. The United States and Tilga calculated the additional taxes due and owing for those years as a minimum of $1,735,025.00 (USD). See Tilga Plea Agreement ¶¶ 6, 13, at 3, 11; Tilga PSR ¶ 5(f), at 5.

In 2005, the IRS began its investigation of Tilga. See Tilga’s Sentencing Memo, at 8. In August 2009, Tilga filed tax returns in the Dominion of Canada for business income earned in each of the years 1999 to 2004. See Gov’t Sentencing Memo, at 4. Tilga provided this information to the IRS in April 2010. See Gov’t Sentencing Memo, at 4. The Canadian Revenue Agency (“CRA”) sent Tilga a notice on November 19, 2010, stating that she owed $7,424,514.40 (Canadian Dollars) in taxes on her Canadian income. See Tilga PSR ¶¶ 82-83, at 43; Gov’t Sentencing Memo, at 4. On April 15, 2010, Tilga attempted to file a notice of claim with the IRS, stating that she was entitled to a credit on her 1999 taxes for taxes owed to the Canadian government for that year. See Gov’t Sentencing Memo, at 4. The IRS accepted the notice, but did not consider the notice to have been “filed” and did not process it. Gov’t Sentencing Memo, at 4.

PROCEDURAL BACKGROUND

A federal grand jury indicted Tilga and Chandler for a Klien conspiracy to defeat the administration of the tax laws of the United States during the period 1998 to 2006 in violation of 18 U.S.C. § 371 and with tax evasion for the years 1999 to 2004 in violation of 26 U.S.C. § 7201. See Redacted Indictment, filed April 9, 2009 (Doc. 2) (“Indictment”). In post-indictment negotiations with the United States, Tilga asserted that the Internal Revenue Code permitted her to file amended United States tax returns claiming foreign tax credits for the years 1999 to 2004, because there is a special ten-year statute of limitations for foreign tax credits. See Gov’t Sentencing Memo, at 3. Tilga argued that, because Canadian taxes are generally higher than United States taxes, the foreign tax credit would wipe out the United States tax deficiency. See Gov’t Sentencing Memo, at 3.

On January 6, 2011, the United States entered into plea agreements with Tilga and Chandler. See Tilga Plea Agreement at 1; Plea Agreement at 1, filed January 6, 2011 (Doc. 128) (“Chandler Plea Agreement”); Gov’t Sentencing Memo, at 5. Tilga and Chandler both pled guilty to Count One of the Indictment, charging a violation of 18 U.S.C. § 371 — the Klein conspiracy. See Tilga Plea Agreement ¶ 3, at 2; Chandler Plea Agreement ¶ 3, at 2. Tilga admitted the salient facts alleged in the conspiracy count of the Indictment: (i) that she failed to report income from her various businesses on her tax returns; (ii) that she entered into an agreement with CTC to defraud the United States; and (iii) that she intended to conceal her Canadian source of income and defraud the United States. See Gov’t Sentencing Memo, at 6; Tilga Plea Agreement ¶ 8(a)-(h), at 3-7.

In the Plea Agreement, the parties stipulated to the calculation of the amount of tax loss.

10. The United States and the Defendant stipulate as follows:

a. For purposes of the advisory United States Sentencing Guidelines, the tax loss for the tax year ending on December 31, 1998, was $23,200.00.

b. The Defendant believes in good faith, relying on the advice of experienced and skilled tax counsel, that she has a foreign tax credit available to her under Title 26, United States Code, Sections 901 and 6511 and applicable regulations, for taxes accrued or actually paid to a foreign country, and that such foreign tax credit would eliminate her liability for federal income taxes in the United States of America for the remaining years of the conspiracy to which she is pleading guilty, that is, the tax years ending on December 31, 1999, through December 31, 2004, inclusive. The Defendant has elected to forego pursuit of the foreign tax credit and instead pay federal income taxes that may be due and owing in the United States of America. The government does not agree with the Defendant concerning the availability and/or applicability of such foreign tax credit on the facts of the present case, as the Defendant has not actually paid the foreign taxes. The government agrees, however, that the Defendant’s decision to pay the United States income taxes should not put her in a worse position for purposes of calculating her relevant conduct under the advisory United States Sentencing Guidelines than had she paid the foreign taxes. The parties accordingly stipulate, for relevant conduct purposes, that the tax loss from the conspiracy to which the Defendant is pleading guilty is limited to the $23,200.00 set out in ¶ 10(a), above.

Tilga Plea Agreement ¶ 10(a)-(b). The Chandler Plea Agreement makes the same stipulation, except that the tax loss is calculated as $23,300.00. See Chandler Plea Agreement ¶ 9(a), at 5.

On August 9, 2011, in compliance with rule 32 of the Federal Rules of Criminal Procedure, Tilga submitted her objections to the PSR to the United States Probation Office (“USPO”). Tilga’s Sentencing Memo, at 1. Tilga contemporaneously submitted these objections to the United States Attorney’s Office for the District of New Mexico (“USAO”). See Tilga’s Sentencing Memo, at 1 n. 2. Chandler also filed his objections to the PSR on August 9, 2011. See Defendant Michael Chandler’s Objection to the Pre-Sentence Report, filed August 9, 2011 (Doc. 152) (“Chandler Objection”). Chandler objects to the first sentence of paragraph 22 of the PSR, which states “Chandler was also known to assist [in] wiring money to and from the accounts.” Chandler Objection at 1-2. See Chandler PSR ¶ 22, at 9. Chandler argues that there is no evidence that he wired money to and from accounts. See Chandler Objection at 1-2. The USPO responded to Tilga’s objections on August 23, 2011, acquiescing on a few of the objections and rejecting the remainder. See Tilga’s Sentencing Memo, at 1.

On August 23, 2011, Chandler filed his sentencing memorandum. See Chandler’s Sentencing Memo, at 1. Chandler argues that he merits a sentence of probation based on: (i) his history and characteristics; (ii) that his crime constitutes aberrant behavior; (iii) the restitution he and Tilga have paid; and (iv) his family ties and responsibilities. See Chandler Sentencing Memo, at 1-9. Additionally, Chandler argues that probation would be a reasonable sentence pursuant to the 18 U.S.C. § 3553(a) factors. See Chandler Sentencing Memo, at 9-10.

On September 2, 2011, the United States responded to Chandler’s objection. See Government’s Response to Defendant Michael Chandler’s Objection to Pre-Sentence Report, filed September 2, 2011 (Doc. 157) (“Response”). The United States asserts that the PSR does not state that Chandler wired any funds; rather, the PSR states that he assisted in wiring such funds. See Response at 1. The United States also argues that, in his Plea Agreement, Chandler conceded that he assisted in using the offshore bank accounts and wiring funds. See Response at 2; Chandler Plea Agreement at ¶ 7(a), at 3 (“In 1998 or 1999, Carolynne Tilga requested my assistance in using a number of off-shore trusts through which we would move money she earned in Canada to purchase properties in the United States.”).

On October 6, 2011, Tilga filed her sentencing memorandum and objections to the PSR. See Tilga’s Sentencing Memo, at 1. In her memorandum she raised six objections to: (i) the calculation of tax loss based on any figure other than the $23,200.00 (USD) figure set out in the Plea Agreement; (ii) the suggestion in the PSR that the conspiracy involved “sophisticated means”; (iii) the PSR’s failure to acknowledge the advantages the United States obtained from the Plea Agreement; (iv) the PSR’s failure to explicitly recognize that the guidelines are advisory; (v) the PSR’s failure to recognize that there are valid bases for a downward variance or downward departure from the guidelines sentencing range; and (vi) the PSR’s failure to accord sufficient weight to Tilga’s civil liability, liability to the Canadian government, and liability for Foreign Bank and Financial Account Report penalties (“FBAR”) when calculating Tilga’s ability to pay a fine. See Tilga’s Sentencing Memo, at 4. Tilga maintains that she could have “eviscerated the federal income tax evasion charges lodged against her by amending her federal income tax returns before trial, taking the Foreign Tax Credit, and eliminating any tax deficiency.” Tilga’s Sentencing Memo, at 9 (citing 26 U.S.C. §§ 901, 6511; United States v. Cruz, 698 F.2d 1148, 1150-51 (11th Cir.1983)). Tilga argues that, because she could have avoided most of the tax loss through the foreign tax credit, the Plea Agreement’s tax loss calculation is correct and that the Court should reject “the alternative and speculative tax loss calculations set out in the PSR predicated on a purportedly larger tax loss amount.” Tilga’s Sentencing Memo, at 10. Tilga asserts that her conduct did not involve any special complexity or intricacy, and that the sophisticated means were not of her creation. See Tilga’s Sentencing Memo, at 11. Tilga further asserts that under 18 U.S.C. § 3553(a), the Court should downwardly depart or vary from the guidelines range to impose a non-custodial sentence. See Tilga’s Sentencing Memo, at 12-19. Finally, Tilga argues that whether the Court should impose a fine on Tilga is committed to the Court’s discretion. See Tilga’s Sentencing Memo, at 20.

On October 8, 2011, the United States filed its sentencing memorandum. See Gov’t Sentencing Memo, at 1. The United States argues that the Court should accept the non-binding stipulated loss amount in this ease, because it was the product of lengthy, intensive negotiations between the parties, and the United States’ decision to compromise was predicated on a review of its ability to prove a tax deficiency were Tilga to raise her foreign tax credit defense. See Gov’t Sentencing Memo, at 10. The United States asserts that “[i]t is the position of the United States that a taxpayer cannot defeat a tax prosecution by amending her returns post-indictment,” but goes on to state that it calculated the amount of loss in the Plea Agreement only for the losses in 1998 because of “the risk that the tax evasion counts for 1999 to 2004 may have fallen” to the post-Indictment foreign tax credit defense Tilga planned to assert. Gov’t Sentencing Memo, at 11, 15. The United States specifically notes that the Plea Agreement avoids “the risk of generating adverse legal precedent with respect to the defendants’ proposed use of the foreign tax credit.” Gov’t Sentencing Memo, at 16. The United States argues that the Court should impose a sentence at the top of the guidelines range on Tilga, because her conduct is “the most egregious conceivable for similarly situated offenders, motivated ... by sheer greed in the face of conspicuous wealth.” Gov’t Sentencing Memo, at 18. The United States asserts that a departure or variance would be inappropriate, because the facts Tilga presents — that she is a mother and a first-time offender — do not distinguish her from any other defendant. See Gov’t Sentencing Memo, at 18. Finally, the United States contends that the Court should impose a substantial fine on Tilga. See Gov’t Sentencing Memo, at 19.

The Court held an evidentiary hearing on Thursday, October 13, 2011. Tilga pointed the Court to a recent case from the United States Court of Appeals for the Tenth Circuit, United States v. Hoskins, 654 F.3d 1086 (10th Cir.2011), which held that a sentencing court may consider unclaimed tax deductions when calculating tax loss. See Transcript of Hearing at 4:14-20 (October 13, 2011) (Theus) (“Tr.”). Tilga stated that her argument is based on the United States Court of Appeals for the Eleventh Circuit’s decision in United States v. Cruz. See Tr. at 5:17-19 (Theus). The Eleventh Circuit, Tilga asserted, held that, when a defendant has firm tax assessments from a foreign government and attempts to take advantage of the foreign tax credit before trial, there is “a viable basis for dismissal or defeat of the tax evasion charges.” Tr. at 6:1-5 (Theus). Tilga further asserted that the foreign tax credit is unique, because a taxpayer has up to ten years to take advantage of the credit. See Tr. at 6:5-7 (Theus).

The United States asserted that the distinction between the defendant in United States v. Cruz and in this case is that the defendant in United States v. Cruz did not address his tax liability under the foreign tax credit before trial while Tilga did. See Tr. at 7:1-12 (Gerson). Under United States v. Cruz, the United States concedes that there is “a colorable argument to be made.” Tr. at 7:23-25 (Gerson). The United States clarified, however, that it is not conceding as a matter of law that Tilga may defeat her tax deficiency post-indictment through the foreign tax credit. See Tr. at 8:1-2 (Gerson). Taking Tilga’s argument at face value, the United States contended that Tilga would still be liable for the first year of the conspiracy, 1998, and, therefore, the United States used the tax losses for that year for the purposes of the guideline offense level calculation. See Tr. at 8:3-12 (Gerson).

The Court expressed concern whether it has authority to avoid the legal issue and accept the party’s stipulation as to the law. See Tr. at 10:12-17 (Court). The United States responded that it is not stipulating that the law allows Tilga to make a post-indictment adjustment to her tax liability through the use of the foreign tax credit. See Tr. at 10:18-22 (Gerson). Instead, the United States asserted that it recognizes that Tilga raises a colorable question and that “[w]e were trying to avoid the situation in which a court of the United States held that a defendant could make use of the foreign tax credit in the way that Tilga wished to use it in this case.” Tr. at 11:1— 4 (Gerson). The United States agreed that the stipulation turned on the parties’ reading of United States v. Cruz being correct. See Tr. at 11:7-14 (Court, Ger-son).

The Court also observed that, if it either sustains or overrules the objection, the Court will be implicitly deciding whether it agrees with the holding of United States v. Cruz or the parties’ construction of that case. See Tr. 12:1-6 (Court). The United States responded that the calculation of the tax deficiency is a mixed question of law and fact. See Tr. 12:10-12 (Gerson). The United States also repeated that it is not the United States’ position that a defendant may make such use of the foreign tax credit. See Tr. 12:24-13:1 (Gerson). It stated that well-developed case law exists supporting the proposition that a taxpayer may not address her tax deficiency post-indictment. See Tr. at 13:19-14:2 (Gerson). The United States indicated that its concern was that the cases do not address the specific question of “ex-post facto correction of tax returns ... through the use of the foreign tax credit.” Tr. at 14:3-5 (Gerson). The United States argued that the USPO and the PSR adopted the stipulated tax loss. See Tr. at 15:21-16:3 (Gerson). The Court pointed out, however, that the USPO used the stipulated tax loss, but recognized its disagreement with that calculation, and the United States agreed that the Court had correctly described the USPO’s position. See Tr. at 16:8-22 (Court, Gerson).

The Court also offered Chandler the opportunity to speak on the issue of tax loss. See Tr. at 17:9-11 (Court). Chandler proposed presenting an expert witness that Chandler and Tilga subpoenaed should the Court have concerns about the foreign tax credit. See Tr. at 17:12-18:3-5 (Court, Johnson, Theus). The witness, Jeffrey Rubinger, was proposed as a specialist in international tax law who currently works as an accountant at KPMG and, before his current employment, was a partner at Holland & Knight LLP in its Fort Lauderdale, Florida office. See Tr. at 18:8-11 (Theus). Mr. Rubinger is also an adjunct professor at the University of Miami School of Law and has written on the subject of international tax law. See Tr. at 18:11-15 (Theus). Tilga stated that it would be productive to hear Mr. Rubinger’s testimony on the foreign tax credit. See Tr. 20:14-15 (Theus). The United States asked whether the nature of Mr. Rubinger’s testimony would be factual or legal, and stated that it would object if his testimony concerned the application of the law. See Tr. at 20:18-23 (Gerson). The Court stated that it would hear Mr. Rubinger’s testimony and that if the United States had specific objections, the Court would hear them as they arose. See Tr. at 20:24-21:2 (Court).

Mr. Rubinger testified that, as a partner at Holland & Knight, he provided representational services to Tilga, including analyzing the foreign tax credit issue. See Tr. at 22:11-23 (Theus, Rubinger). Mr. Rubinger stated that, when he looked at the facts of Tilga’s case, he understood that the income was from foreign sources, and that he discussed the special rules that apply to the foreign tax credit under the Internal Revenue Code. See Tr. at 23:3-7 (Rubinger). Mr. Rubinger explained that there is a ten-year statute of limitations to claim a foreign tax credit and that, if the credit is claimed within the ten-year period, it “relates back” to when the tax accrued. Tr. at 23:7-11 (Rubinger). Relating his testimony to Tilga, Mr. Rubinger stated that, if Tilga claimed the foreign tax credit within the statute of limitations for the years 1999 to 2004, she could “eliminate any deficiency for civil and criminal purposes.” Tr. at 23:19-24:3 (Rubinger). Mr. Rubinger asserted that the Canadian government assessed tax liability of $7 million (CAD) in 2010 and that the amount has not been released, discharged, or abated in any way. See Tr. at 24:11-25 (Rubinger, Theus). Mr. Rubinger further asserted that, Title 26 of the Internal Revenue Code requires that foreign tax credits relate back retroactively such that for civil purposes Tilga would have no deficiency. See Tr. at 25:8-14 (Rubinger). He commented that, if there is no civil tax deficiency, then there cannot be a criminal tax deficiency. See Tr. at 25:8-14 (Rubinger). Mr. Rubinger also referred the Court to Boulware v. United States, 552 U.S. 421, 128 S.Ct. 1168, 170 L.Ed.2d 34 (2008), as support for his position. See Tr. at 25:16-18 (Rubinger).

Chandler’s counsel, Erlinda O. Johnson, also questioned Mr. Rubinger concerning the foreign tax credit. See Tr. at 25:24 (Johnson). Mr. Rubinger clarified that there are eases which address a net-operating loss, where taxpayers have a “three year carry back,” and that courts have not allowed such losses to eliminate tax deficiencies post-indictment because the net operating loss does not relate back. Tr. at 26:20-27:6 (Rubinger). Mr. Rubinger stated that relation back under the foreign tax credit is mandatory and that its purpose is to alleviate double taxation. See Tr. 27:7-19 (Johnson, Rubinger). “When a United States taxpayer is earning income [in] a foreign country [and] the foreign countr[y] taxes the income ... the whole point [of the foreign tax credit] is to not allow the United States to tax the same income.” Tr. at 27:13-19 (Rubinger). Mr. Rubinger went on to explain that “the rules work even though a United States individual taxpayer is typically on a cash method, which means that [their] income is taxable when it’s received ... [and] allow[s] individual taxpayers to apply the foreign tax credits on an accrual basis.” Tr. at 28:1-9 (Rubinger). “So the Canadian tax credits accrued each [year] when they were owed; despite the fact that they may hot have been paid, they were owed to Canada on the accrual method.” Tr. at 28:10-12 (Rubinger). Mr. Rubinger stated that, “whether she paid them or not, under the accrual method of claiming the foreign tax credit she would get a retroactive tax credit.” Tr. at 28:16-18 (Rubinger).

The United States then cross-examined Mr. Rubinger. Responding to a question whether any federal court had dismissed an indictment on the grounds that a taxpayer, post-indictment, had paid taxes to a foreign sovereign, Mr. Rubinger agreed that no such federal decision existed. See Tr. 29:8-14 (Gerson, Rubinger). Expanding on his answer, Mr. Rubinger explained that the decision in United States v. Cruz comes very close to this holding, but in that case, the facts were different because the defendant had not filed returns before trial. See Tr. 29:14-23 (Rubinger). Mr. Rubinger agreed that it would be fair to say that Tilga’s defense is predicated on the reasoning of United States v. Cruz, and not on the holding of that case. See Tr. at 29:24-30:2 (Gerson, Rubinger). He asserted that Tilga’s defense is based on the Internal Revenue Code, which establishes that the foreign tax credit relates back, and that this retroactivity is what the Eleventh Circuit, in United States v. Cruz, held could preclude criminal liability pre-trial. See Tr. at 30:2-8 (Rubinger). Mr. Rubinger characterized the holding in United States v. Cruz as accelerating the expiration of the statute of limitations for claiming the foreign tax credit to the period before trial and added that the “case was highly criticized for that analysis.” Tr. at 30:13-15 (Rubinger). Mr. Rubinger agreed that, although the Internal Revenue Code says up to ten years, the judicial authority puts the expiration of the statute of limitations earlier if a criminal tax prosecution is implemented. See Tr. at 30:22-31:1 (Gerson, Rubinger).

In Tilga’s re-direct, Mr. Rubinger stated that all the returns were prepared and the money was in the trust account ready to be paid before trial such that she was poised to exercise the foreign tax credit before it would expire under United States v. Cruz. See Tr. at 31:8-11 (Theus, Rubinger). The Court asked the United States to clarify the point of its questions regarding the statute of limitations for the foreign tax credit. See Tr. at 32:2-3 (Court). The United States responded that it was attempting to show that, although the Internal Revenue Code says the period is ten years, courts have not always applied that time period. See Tr. at 32:4-33:15 (Gerson, Rubinger). The United States reiterated that its position has always been that “a taxpayer may not fix the commission of a crime after the crime [has] been completed.” Tr. at 33:19-25 (Gerson). The United States admitted that, had it not entered into this stipulation, it would be arguing on the other side of this issue — that the total tax loss should be $1,735,025.00 (USD) — and agreeing with the USPO. See Tr. at 34:7-21 (Court, Gerson). The United States stated that is the United States’ legal position in this case that “this is an open question of law which we recognize we would have stood some risk of losing had we gone to trial.” Tr. at 34:22-25 (Ger-son).

The Court also asked the United States to explain what the criticism of the holding in United States v. Cruz has been. See Tr. at 35:12-15 (Court). The United States responded that it understood that Mr. Rubinger was referencing the position that the Internal Revenue Code is absolute in its position and “when the code says ten years it’s ten years,” when he referenced criticism. Tr. at 35:17-20 (Gerson). Expanding on this remark, the United States explained that the criticism on the part of tax professionals is that the United States v. Cruz decision violates the Internal Revenue Code. See Tr. at 35:20-21 (Gerson). The United States asserted that “what the court itself said in Cruz [was] that they need to make decisions that are practical and attempt to fit the best interests of the United States over all and [not just] follow[ ] lockstep with the words of the statute.” Tr. at 35:21-25 (Gerson). Mr. Rubinger stated that there is no provision in the Internal Revenue Code that allows for the acceleration of the ten-year period for the foreign credit. See Tr. at 38:5-9 (Johnson, Rubinger).

Responding to Tilga’s second objection, to the PSR’s reference to sophisticated means, the United States asserted that the Plea Agreement stipulated that the sophisticated-means enhancement would not apply to Tilga. See Tr. at 39:3-5 (Gerson). The United States explained that it believed that the sophisticated-means enhancement would apply to CTC, and its officers or employees, but not to a customer of CTC like Tilga. See Tr. at 39:7-13 (Gerson). The Court asked whether Tilga used business entities, wired offshore accounts, and used shell companies to hide her income, and the United States admitted that she had. See Tr. at 40:1-5 (Court, Gerson). The United States said that it agreed to the stipulation, because Tilga was buying a product from another corporation. See Tr. at 40:5-11 (Court, Gerson). In response to the Court’s questioning, the United States admitted that PTOs are sophisticated means, and that it was unaware of any reported opinion which drew a distinction between the seller and a customer in terms of sophisticated means. See Tr. at 40:14-41:4 (Court, Gerson).

Tilga also argued that she did not employ sophisticated means to commit tax evasion. Tilga referred the Court to the argument in her sentencing memorandum and stated that the analysis looks not just to the means a defendant employs, but to “the context of the particular offense or offense[s] being examined.” Tr. at 41:8-17 (Theus). Tilga argues that her conduct is “par for the course” for the offense she committed, and asserted that several cases cited in her sentencing memorandum involve foreign entities, foreign bank accounts, and substantial sums of money. Tr. at 41:17-42:2 (Theus). Tilga argued that, to qualify for the sophisticated-means enhancement, the conduct has to be “something beyond what happens in the garden variety type of offense” and that there is “nothing especially sophisticate^] or complex about this matter.” Tr. at 42:13-25 (Theus). Tilga agreed that CTC, in marketing and managing different product for their customers, engaged in sophisticated means, but asserted that there is a difference between those activities and the consumer who buys a product relying on CTC’s representation about that product. See Tr. at 43:13-20 (Theus). Tilga also conceded that she had not found any cases supporting the distinction between a customer and a seller using sophisticated means. See Tr. at 43:21-44:6 (Court, Theus). Tilga contended that CTC had lawyers and accountants on staff who made representations to her about the acceptability of their products to the IRS. See Tr. at 44:23-25 (Theus). She asserted that sophisticated means requires “some deliberate or volitional activity on the part of the accused in terms of creation or management of these types of products.” Tr. at 45:1-6 (Theus). Tilga maintained that, if the sophisticated-means enhancement applies every time some sophisticated means was used in connection to the offense, then a court could apply the enhancement to virtually any offense that might come before the court. See Tr. at 45:6-9 (Theus).

Chandler also spoke, and supported the United States’ position that Tilga did not employ sophisticated means, because she was no more than a customer who bought a product. See Tr. at 45:16-19 (Johnson). Chandler argued that it is the managers and directors of CTC who should have the sophisticated-means enhancement. See Tr. at 45:19-23 (Johnson). Chandler asserted that Tilga was a customer and that CTC sold her a bill of goods with the promise that they were completely legitimate. See Tr. at 45:24-46:1 (Johnson). Because CTC held Tilga’s hand throughout the time period that she held the trusts and prided itself on the fact that its employees would serve as trustees, Chandler argued that Tilga’s actions do not qualify for the sophisticated-means enhancement. See Tr. at 46:1-6 (Johnson). Chandler further asserted that the customer is not involved in knowing the intricacies of the PTOs that were sold and, therefore, the sophisticated-means enhancement would apply to the individuals who managed the trusts or came up with the idea for the trust. See Tr. at 46:6-11 (Johnson). Conceding that at some point Tilga should have realized that her conduct was criminal, Chandler nonetheless argued that Tilga, when she bought the PTOs, was “basically [given] a handbook and ... led by the hand [to] understand ‘this is how you do this and you do this and you do that.’ ” Tr. at 46:12-24 (Johnson).

Additionally, the Court heard arguments on the stipulation in the Plea Agreement that Tilga was not the organizer, leader, or supervisor of the criminal activity. See Tr. at 48:12-19 (Court). The United States stated that Tilga is substantially less culpable than the people at CTC. See Tr. 48:22-24 (Court, Gerson). Chandler again pointed out, that both he and Tilga were sold a product, and did not start the PTOs. See Tr. at 49:11-14 (Johnson). The Court accepted the stipulation on the role adjustment, because “when we consider the entire criminal organization, I agree that she’s substantially less culpable than the people at Commonwealth.” Tr. at 49:16-20 (Court).

The United States also stated that it was the parties’ position that neither Tilga nor Chandler “possessed any special skill with respect to tax law or with respect to taxes.” Tr. at 50:1^1 (Gerson). It clarified that the United States’ argument was not that Tilga does not have skills, because Tilga is highly educated, but that, she did not “victimize[] some other person by making use of these special skills.” Tr. at 50:5-15 (Court, Gerson). The United States asserted that Tilga has special skills with respect to marketing and collecting fees for services providers, but that she does not have any special skills that relate to taxes or tax liability. See Tr. at 51:2-6 (Gerson). The Court agreed that the enhancement for use of a special skill is inappropriate and accepted the parties’ stipulation to that effect. See Tr. at 52:5-13 (Court).

The Court expressed concern whether an obstruction enhancement was appropriate. See Tr. at 52:14-21 (Court). The United States asserted that, had it gone to trial, the United States would have called Grant Simmons, Tilga’s former employee, and had him testify that Tilga came to his house and told him that she “was not going to take the fall for this.” Tilga PSR ¶ 40, at 21; Tr. at 52:22-25 (Gerson). The United States argued that these actions show consciousness of guilt and “was being uttered to prevent the United States from carrying out an investigation in this case.” Tr. at 53:1-8 (Gerson). Tilga stated that no admissible evidence would establish that she intended to obstruct or impede the administration of justice. See Tr. at 53:10-13 (Theus). Additionally, Tilga argued that Simmons would have been aggressively cross-examined and impeached. See Tr. at 53:13-20 (Theus). The United States admitted that, while it would have been able to establish that Tilga said those things to Simmons, it would not have been “able to establish by a preponderance of the evidence that that was reasonably likely to interfere with the investigation.” Tr. at 54:22-55:5 (Gerson).

Tilga stated that her objection to the PSR’s failure to acknowledge the advantages that the United States received from the Plea Agreement had been addressed and was more appropriate for argument rather than inclusion in the PSR. See Tr. at 57:21-58:3 (Theus). Tilga admitted that her objection is moot to the extent that the information is presently before the Court through her sentencing memorandum. See Tr. at 58:4-7 (Court, Theus). Additionally, Tilga stated that her objection to the PSR’s failure to acknowledge the advisory status of the guidelines had been satisfactorily addressed and included in the sentencing memorandum. See Tr. at 58:12-59:2 (Court, Theus).

On October 31, 2011, Chandler’s attorney wrote the Court regarding the standard of proof and Sixth Amendment requirements for applying a sentencing enhancement. See Letter from Erlinda Johnson to the Court (dated October 31, 2011), filed October 31, 2011 (Doc. 164) (“Letter”). Chandler requested that the Court accept the stipulations included in paragraph 9(b) of Chandler’s Plea Agreement that Chandler’s offense did not involve a breach of trust, a special skill, sophisticated means, an aggravating role, or obstruction of justice. See Letter at 1. Chandler focuses his discussion on U.S.S.G. § 2Tl.l(b)(2)’s sophisticated-means enhancement. See Letter at 1-2. Chandler points the Court to United States v. Lewis, 93 F.3d 1075 (2d Cir.1996), which applied the sophisticated-means enhancement but acknowledged that the enhancement “targets conduct that is more complex, demonstrates greater intricacy, or demonstrates greater planning than a routine tax-evasion case.” Letter at 1-2. Chandler also cites United States v. Rice, 52 F.3d 843 (10th Cir.1995), which reversed the application of the sophisticated-means enhancement where, “[b]y using [several] corporations, Mr. Rice claimed to have paid withholding taxes he did not indeed pay.” Letter at 1-2. Chandler argues that the “conduct of the defendants [in this case] was more similar to Mr. Rice’s conduct because the defendants herein merely requested, of others, the movement of moneys from one account to a different account.” Letter at 2. Chandler also submits that, pursuant to Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004) and United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), a sentence must be determined solely “by reference to ‘facts reflected in the jury verdict or admitted by the defendant,’” and that any other sentencing fact must be proved to a jury beyond a reasonable doubt to a jury. Letter at 2.

LAW REGARDING CALCULATION OF TAX LOSS

The guidelines define “tax loss” for the purpose of sentencing defendants in U.S.S.G. § 2T1.1: “If the offense involved tax evasion or a fraudulent or a false return, statement, or other document, the tax loss 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).” U.S.S.G. § 2Tl.l(c)(l). Under this provision, 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.” U.S.S.G. § 2Tl.l(c)(l), Note A. The United States bears the burden of proving the amount of tax Joss arising from the defendant’s illegal acts, but under the guidelines, “neither the government nor the court has an obligation to calculate the tax loss with certainty or precision.” United States v. Sullivan, 255 F.3d 1256, 1263 (10th Cir.2001) (quotation omitted).

1. Tenth Circuit Jurisprudence on Availability of Unclaimed Deductions.

In United States v. Spencer, 178 F.3d 1365 (10th Cir.1999), the Tenth Circuit stated that U.S.S.G. § 2T1.1 Note A’s “more accurate determination” provision does not allow taxpayers “a second opportunity to claim deductions after having been convicted of tax fraud.” 178 F.3d at 1368. The Tenth Circuit explained that, in calculating tax loss for the purpose of sentencing, “we are not computing an individual’s tax liability as is done in a traditional audit[, but r]ather we are merely assessing the tax loss resulting from the manner in which the defendant chose to complete his income tax returns.” United States v. Spencer, 178 F.3d at 1368. Although the Tenth Circuit in United States v. Spencer discussed the availability of unclaimed deductions when calculating tax loss, the Tenth Circuit ultimately rejected the defendant’s tax-loss estimate because it was not supported by. a “scintilla of competent evidence.” 178 F.3d at 1369.

In United States v. Hoskins, 654 F.3d 1086 (10th Cir.2011), the Tenth Circuit again refused to “squarely hold that unclaimed deductions can never be considered by a district court.” 654 F.3d at 1094. The Tenth Circuit found that “the plain language of § 2T1.1 does not categorically prevent a court from considering unclaimed deductions in its sentencing analysis.” United States v. Hoskins, 654 F.3d at 1094. Instead, “§ 2T1.1 directs courts to calculate the tax loss that would have resulted had the offense been successfully completed.” United States v. Hoskins, 654 F.3d at 1094. Thus, “the ‘object of the offense’ refers to the ‘amount by which [a defendant] underreported and fraudulently stated his tax liability on his return.’ ” United States v. Hoskins, 654 F.3d at 1094 (quoting United States v. Chavin, 316 F.3d 666, 677 (7th Cir.2002)). Addressing United States v. Spencer, the Tenth Circuit explained that the holding of that case still holds true where “a defendant offers weak support for a tax-loss estimate,” because “nothing in the Guidelines requires a sentencing court to engage in the ‘nebulous and potentially complex exercise of speculating about unclaimed deductions.” United States v. Hoskins, 654 F.3d at 1094 (emphasis original) (quoting United States v. Yip, 592 F.3d 1035, 1041 (9th Cir.2010)). The Tenth Circuit held, however, that “nothing in the Guidelines prohibits a sentencing court from considering evidence of unclaimed deductions in analyzing a defendant’s estimate of the tax loss suffered by the government.” United States v. Hoskins, 654 F.3d at 1094-95 (emphasis original). “[A] court may exercise its discretion to consider additional evidence that could guide its findings on the losses to the government relevant to sentencing.” United States v. Hoskins, 654 F.3d at 1095. The United States is not supposed to reap windfall gains as a result of tax evasion and cannot assert to have lost revenue it never would have collected had the defendant not evaded his taxes. See United States v. Hoskins, 654 F.3d at 1095 (citing United States v. Gordon, 291 F.3d 181, 187 (2d Cir.2002)).

In a footnote, however, the Tenth Circuit emphasized that § 2T1.1 “does not permit a defendant to benefit from deductions unrelated to the offense at issue.” United States v. Hoskins, 654 F.3d at 1095 n. 9. Thus, “unclaimed deductions for student loan interest or solar energy credits, for example, are not considered because they do not relate to the ‘object of the offense’ and are not relevant to restitution or guideline calculations for sentencing purposes.” United States v. Hoskins, 654 F.3d at 1095 n. 9.

Chief Judge Briscoe wrote an opinion concurring in part and dissenting in part in United States v. Hoskins. Chief Judge Briscoe concurred with “the portions of the majority’s opinion affirming Hoskins’ conviction, the district court’s ultimate finding regarding the amount of the tax loss, and the district court’s application of the U.S.S.G. § 2Tl.l(b)(l) enhancement.” United States v. Hoskins, 654 F.3d at 1100 (Briscoe, C.J., concurring in part and dissenting in part). She dissented with respect to the portions of the majority opinion “in which the majority takes the unnecessary step in announcing a rule permitting defendants in future cases to offer deductions they did not actually claim in order to establish a ‘more accurate determination of the tax loss’ under U.S.S.G. § 2Tl.l(a).” United States v. Hoskins, 654 F.3d at 1100. Chief Judge Briscoe explained that, in her view, the majority opinion’s rule on tax loss improperly complicates sentencing in tax cases, improperly characterizes the Tenth Circuit’s holding in United States v. Spencer, and “essentially allows the defendant a ‘do over.’ ” United States v. Hoskins, 654 F.3d at 1101-02.

2. The Foreign Tax Credit.

26 U.S.C. § 901 provides that a United States taxpayer may claim a tax credit for the amount of any income taxes paid or accrued to any foreign country. See 26 U.S.C. § 901(a)-(b). Subsection (a) specifically notes that “[s]uch choice for any taxable year may be made or changed at any time before the expiration of the period prescribed for making a claim for credit or refund of the tax imposed.” 26 U.S.C. § 901(a). Section 904 of Title 26 of the United States Code limits the total amount of credit that a United States taxpayer may take under § 901(a) and provides that “[t]he total amount of the credit taken under section 901(a) shall not exceed the same proportion of the tax against which such credit is taken which the taxpayer’s taxable income from sources without the United States ... bears to his entire taxable income for the same taxable year.” 26 U.S.C. § 904(a). Furthermore, 26 U.S.C. § 905 states:

(B) Taxes subsequently paid. — Any such taxes if subsequently paid—

(i) shall be taken into account — (I) in the case of taxes deemed paid under section 902 or section 960, for the taxable year in which paid (and no redetermination shall be made under this section by reason of such payment), and (II) in any other case, for the taxable year to which such taxes relate.... '

26 U.S.C. § 905(c)(2)(B).

In another section of Title 26, Congress provides special rules relating to foreign tax credits. See 26 U.S.C. § 6511(d). 26 U.S.C. § 6511(d)(3)(A) establishes a special statute of limitations with respect to foreign taxes paid or accrued. Subsection (d)(3)(A) provides:

If the claim for credit or refund relates to an overpayment attributable to any taxes paid or accrued to any foreign country or to any possession of the United States for which credit is allowed against the tax imposed by subtitle A in accordance with the provisions of section 901 or the provisions of any treaty to which the United States is a party, in lieu of the 3-year period of limitation prescribed in subsection (a), the period shall be 10 years from the date prescribed by law for filing the return for the year in which such taxes were actually paid or accrued.

26 U.S.C. § 6511(d)(3)(A).

The Tenth Circuit appears to have addressed the foreign tax credit only in a civil case, Tipton & Kalmbach v. United States, 480 F.2d 1118 (10th Cir.1973). Tipton & Kalmbach v. United States addressed a claim for refunds of federal income taxes paid in 1964 through 1966, and answered questions relating to the determination of where services were performed. See 480 F.2d at 1119, 1121.

The Eleventh Circuit, in United States v. Cruz, 698 F.2d 1148, held that a defendant in a tax evasion case could not contend that the foreign tax credit wiped out the United States deficiency, because the foreign tax liability had not been determined before trial. See 698 F.2d at 1152. The Eleventh Circuit explained that, “[i]n the case of the foreign tax credit, the final event which fixes the amount of the credit is the levy of the tax.” United States v. Cruz, 698 F.2d at 1151 (citing United States v. Campbell, 351 F.2d 336, 338 (2d Cir.1965)). The Eleventh Circuit noted that, once the liability becomes fixed, it “relates back” to the year in which it was levied. United States v. Cruz, 698 F.2d at 1151. In reaching its holding and interpreting 26 U.S.C. § 905, the Eleventh Circuit emphasized that, “we will not be constrained by intricate technicalities which would create a haven for federal tax evasion.” United States v. Cruz, 698 F.2d at 1152. The Eleventh Circuit stated: “When interpreting statutes, we are required to give a practical interpretation which will not produce an absurd result.” United States v. Cruz, 698 F.2d at 1152.

The defendant in United States v. Cruz defended himself at trial on the theory that no tax deficiency existed, because as a citizen of the Dominican Republic, a country which taxes income earned worldwide, his tax liability to it had accrued. See 698 F.2d at 1150. In rejecting this argument on appeal, the Eleventh Circuit commented:

[Ujnder Cruz’s interpretation, a taxpayer in his position could wait and pay no tax, either to the United States or the Dominican Republic until the United States authorities became aware of an irregularity in his tax return. Once discovered, he could either pay or immediately admit the foreign tax and claim the retroactive United States tax credit under section 6511(d)(3), as an absolute defense.

United States v. Cruz, 698 F.2d at 1152. Concerns with fraud and the six-year statute of limitations on 26 U.S.C. § 7201 prosecutions were evident in the Eleventh Circuit’s approach to its analysis. See United States v. Cruz, 698 F.2d at 1152. The defendant did not offer any proof that he had fixed his foreign tax liability before trial. See United States v. Cruz, 698 F.2d at 1152. The Eleventh Circuit upheld a jury instruction which required that the jury find that “all events have occurred which fix the amount of the tax and determine the liability of the taxpayer to pay it.” United States v. Cruz, 698 F.2d at 1150.

The practical effect of this decision means the tax evader can no longer play one government against the other to defeat an evasion prosecution.... It now means that when the government begins a section 7201 prosecution of a taxpayer who claims a foreign tax credit under section 905, the government accelerates that time within which the taxpayer may exercise the right to fix the amount of the foreign tax liability and claim the foreign tax credit.

United States v. Cruz 698 F.2d at 1152.

PROOF OF ENHANCEMENTS UNDER THE GUIDELINES

In Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000), the Supreme Court of the United States reaffirmed the principle that it is permissible for sentencing judges “to exercise discretion — taking into consideration various factors relating both to offense and offender — in imposing judgment within the range prescribed by statute.” 530 U.S. at 481, 120 S.Ct. 2348. The Supreme Court cautioned, however, that the Constitution limits this discretion and that the Sixth Amendment requires that, “[ojther than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt.” Apprendi v. New Jersey, 530 U.S. at 490, 120 S.Ct. 2348. In Blakely v. Washington, the Supreme Court elaborated on its holding in Apprendi v. New Jersey, stating that the “statutory maximum for Apprendi purposes is the maximum sentence a judge may impose solely on the basis of the facts reflected in the jury verdict or admitted by the defendant.” Blakely v. Washington, 542 U.S. 296, 303, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004) (emphasis omitted) (internal quotations and citations omitted). In United States v. Booker, the Supreme Court expanded its earlier holdings to apply to sentencing enhancements that exceeded maximum sentences under the sentencing guidelines. See 543 U.S. 220, 239, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005) (“Regardless of whether the legal basis of the accusation is in a statute or in guidelines promulgated by an independent commission, the principles behind the jury trial right are equally applicable.”).

The Supreme Court in United States v. Booker found those provisions of the Federal Sentencing Reform Act of 1984 that made the guidelines mandatory, see 18 U.S.C. § 3553(b)(1), or which relied upon the guidelines’ mandatory nature, see 18 U.S.C. § 3742(e), incompatible with the Sixth Amendment, see United States v. Booker, 543 U.S. at 245, 125 S.Ct. 738. Accordingly, the Supreme Court in United States v. Booker severed and excised 18 U.S.C. § 3553(b)(1) — the portion of the federal sentencing statute that made it mandatory for courts to sentence within a particular sentencing guideline range— from the remainder of the Act, thus “mak[ing] the Guidelines effectively advisory.” United States v. Booker, 543 U.S. at 245, 125 S.Ct. 738. The Supreme Court’s holding in United States v. Booker “requires a sentencing court to consider Guideline ranges, but it permits the court to tailor the sentence in light of other statutory concerns as well.” United States v. Booker, 543 U.S. at 245-46, 125 S.Ct. 738.

The Supreme Court confirmed that an advisory guidelines system comports with the Sixth Amendment. In Cunningham v. California, 549 U.S. 270, 127 S.Ct. 856, 166 L.Ed.2d 856 (2007), Justice Ginsburg, joined by the other four justices who had been part of the constitutional majority in United States v. Booker and Chief Justice Roberts, noted that, despite disagreement over the most appropriate method to remedy the mandatory Guidelines’ constitutional infirmity, all nine justices that took part in the United States v. Booker decision agreed that “the Federal Guidelines would not implicate the Sixth Amendment were they advisory.” Cunningham v. California, 549 U.S. at 285, 127 S.Ct. 856. Not only did making the guidelines advisory remedy the Supreme Court’s Sixth Amendment concerns, it seems to have alleviated the constitutional concerns regarding the appropriate burden of proof that existed under the mandatory system. A person who is found guilty of a crime beyond a reasonable doubt is exposed to the maximum punishment the statute of conviction allows, rather than the maximum allowed under the Guidelines, and it is therefore constitutional to sentence the guilty defendant any where within the range based on facts proved only by a preponderance of the evidence. See, e.g., Harris v. United States, 536 U.S. 545, 558, 122 S.Ct. 2406, 153 L.Ed.2d 524 (2002) (“Judicial factfinding in the course of selecting a sentence within the authorized range does not implicate the indictment, jury-trial, and reasonable-doubt components of the Fifth and Sixth Amendments.”).

In United States v. Magallanez, 408 F.3d 672 (10th Cir.2005), the Tenth Circuit held that Blakely v. Washington and United States v. Booker had not changed the district court’s enhancement-findings analysis. See United States v. Magallanez, 408 F.3d at 684-85. United States v. Magallanez involved plain-error review of a drug sentence in which a jury found the defendant, Magallanez, guilty of conspiracy to possess with intent to distribute and to distribute methamphetamine. See 408 F.3d at 676. As part of its verdict, the jury, through special interrogatory, attributed to the defendant 50-500 grams of methamphetamine; at sentencing, however, the judge — based on testimony of the various amounts that government witnesses indicated they had sold to the defendant — attributed 1200 grams of methamphetamine to the defendant and used that amount to increase his sentence under the guidelines. See United States v. Magallanez, 408 F.3d at 682. The district court’s findings increased the defendant’s guideline sentencing range from 63 to 78 months to 121 to 151 months. See United States v. Magallanez, 408 F.3d at 682-83. The Tenth Circuit stated that, both before and after Congress’ passage of the Sentencing Reform Act, “sentencing courts maintained the power to consider the broad context of a defendant’s conduct, even when a court’s view of the conduct conflicted with the jury’s verdict.” United States v. Magallanez, 408 F.3d at 684. Although United States v. Booker made the guidelines “effectively advisory,” the Tenth Circuit in United States v. Magallanez reaffirmed that “district courts are still required to consider Guideline ranges, which are determined through application of the preponderance standard, just as they were before.” 408 F.3d at 685 (internal citation omitted). In the Tenth Circuit’s estimation, “the only difference is that the court has latitude, subject to reasonableness review, to depart from the resulting Guideline ranges.” United States v. Magallanez, 408 F.3d at 685. Two years later, in United States v. Hall, 473 F.3d 1295 (10th Cir.2007), the Tenth Circuit confirmed its position in United States v. Magallanez and held that, in the context of sentencing enhancements, “Booker makes clear that judicial fact-finding by a preponderance of the evidence standard -is unconstitutional only when it operates to increase a defendant’s sentence mandatorily.” 473 F.3d at 1312.

LAW REGARDING U.S.S.G. § 3B1.3

U.S.S.G. § 3B1.3, entitled “Abuse of Position of Trust or Use of Special Skill,” provides:

If the defendant abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense, increase by 2 levels. This adjustment may not be employed if an abuse of trust or skill is included in the base offense level or specific offense characteristic. If this adjustment is based upon an abuse of a position of trust, it may be employed in addition to an adjustment under § 3B1.1 (Aggravating Role); if this adjustment is based solely on the use of a special skill, it may not be employed in addition to an adjustment under § 3B1.1 (Aggravating Role).

U.S.S.G. § 3B1.3. Application Note 4 defines “Special skill” as “a skill not possessed by members of the general public and usually requiring substantial education, training or licensing. Examples would include pilots, lawyers, doctors, accountants, chemists, and demolition experts.” U.S.S.G. § 3B1.3 cmt. n. 4. The United States must satisfy two elements to meet § 3B1.3: (i) the defendant possessed a special skill or a position of trust; and (ii) the defendant used that skill or abused that position to significantly facilitate the commission or concealment of the offense. See United States v. Burt, 134 F.3d 997, 998-99 (10th Cir.1998).

The Tenth Circuit recognizes that a defendant need “not complete formal educational or li