## Facts

- William E. Eaken, an Illinois attorney, served as court-appointed administrator of Mary Oma Lane’s estate and controlled an estate bank account at the same bank where he maintained personal and business accounts.
- In 1985, Eaken withdrew nearly all estate funds through a series of transactions, making 34 withdrawals and leaving a minimal balance in the estate account.
- He routed substantial portions of the withdrawn funds into several accounts, including his law-practice account and accounts associated with business entities, with more than $26,000 of withdrawals remaining unaccounted for.
- Eaken used the diverted funds for personal and business expenses, including purchases and construction-related costs for business ventures.
- Eaken did not file a 1985 federal income tax return; he submitted only an extension request accompanied by a $1,700 payment.
- The government treated the diverted estate funds as taxable income for 1985, producing an estimated tax liability of roughly $80,000, and contended that Eaken’s handling of the funds was intended, at least in part, to conceal income from the IRS.
- An IRS agent testified that Eaken admitted both the embezzlement and the failure to file for 1985.

## Issues

1. Whether the evidence was sufficient to support a conviction for tax evasion under 26 U.S.C. § 7201 by proving an affirmative act of evasion beyond mere nonfiling or nonpayment.
2. Whether a jury could infer willfulness to evade tax where the defendant argued his conduct was intended only to conceal embezzlement, not to evade taxes.

## Decision

- The Seventh Circuit affirmed Eaken’s conviction for tax evasion under 26 U.S.C. § 7201.
- The court held that the evidence supported a finding of a substantial tax deficiency.
- The court held that Eaken’s pattern of withdrawals and transfers among multiple accounts, including accounts not in his personal name, permitted the jury to find affirmative acts designed to conceal income.
- The court held that the government was not required to prove tax evasion was Eaken’s sole motive; it was enough that tax-evasion intent played a part.
- Applying deferential sufficiency review, the court concluded a rational jury could find all § 7201 elements beyond a reasonable doubt.

## Legal Principles

- A § 7201 conviction requires proof of (1) a tax deficiency, (2) willfulness, and (3) an affirmative act constituting an attempt to evade or defeat tax.
- Mere failure to file or pay, without more, is generally insufficient for § 7201; an affirmative act may be shown by conduct likely to mislead or conceal.
- Concealment can be inferred from transactional patterns, including moving funds through multiple accounts, using methods that reduce transparency, and leaving funds unaccounted for.
- The government need not prove tax evasion was the exclusive purpose of the defendant’s acts; mixed motives do not defeat § 7201 if tax-evasion intent was among the reasons for the conduct.
- On appeal, sufficiency is assessed by viewing the evidence and reasonable inferences in the light most favorable to the verdict.

## Conclusion

The court upheld the tax-evasion conviction because Eaken’s handling of diverted estate funds—systematic withdrawals, distribution across multiple accounts, and unexplained missing amounts—supported the jury’s finding of affirmative concealment and willful intent to evade taxes, even if the same conduct also served to conceal embezzlement.


United States v. Eaken, 17 F.3d 203 (7th Cir. 1994)