## Facts

- Anthony J. Gricco managed private companies operating parking facilities at Philadelphia International Airport and oversaw employees and parking-fee collections.
- Michael (William) T. McCardell, Gricco’s brother-in-law, served as his chief assistant, supervised tollbooths, and collected money at shift ends.
- The parking system generated tickets and machine records that matched entry/exit times to calculated fees, with shift bags containing tickets, cash, and machine tapes.
- Gricco, McCardell, and others devised a scheme to steal cash by swapping customers’ legitimate high-fee tickets with “replacement tickets” reflecting shorter stays and lower fees.
- Cashiers collected the full fee from customers but submitted the lower-fee replacement ticket and reduced cash amount; conspirators kept the difference.
- None of the participants reported scheme proceeds as income to the IRS.
- Gricco structured cash activity and warned others to avoid deposits exceeding $10,000 to prevent bank currency-transaction reporting.
- Gricco advised participants to keep proceeds in home safes to avoid IRS attention; participants purchased and used home safes.
- After the scheme ended, federal charges followed state acquittals for theft/forgery; a federal jury convicted both defendants of a Klein-type conspiracy and tax offenses.

## Issues

1. Whether sufficient evidence showed that impeding the IRS’s assessment and collection functions was an agreed-upon object of the § 371 conspiracy (a Klein conspiracy).
2. Whether sufficient evidence supported convictions for tax evasion and filing false returns based on unreported illicit income.
3. Whether the district court erred at sentencing by inadequately supporting the tax-loss calculation and by applying guideline enhancements without specific factual findings.

## Decision

- The Third Circuit affirmed the convictions for conspiracy to defraud the United States, tax evasion, and making false tax returns.
- The court held the evidence permitted a rational jury to find that obstructing the IRS was an object of the conspiracy, based on concealment methods tied to tax avoidance (unreported income, structured banking behavior, and use of home safes).
- The court held the evidence also supported willfulness and guilt on the tax and false-return counts.
- The court vacated the sentences and remanded for resentencing because the tax-loss calculation lacked an adequate factual foundation and the court failed to make sufficiently specific findings supporting certain enhancements.

## Legal Principles

- A Klein conspiracy under 18 U.S.C. § 371 requires proof of an agreement to defraud the United States by obstructing a lawful governmental function, including the IRS’s tax-assessment and collection functions.
- The conspiracy’s object and intent may be proved by circumstantial evidence, including coordinated conduct aimed at avoiding detection by tax authorities (e.g., structuring cash activity to evade reporting and storing proceeds to avoid scrutiny).
- Tax evasion and false-return offenses may be supported by circumstantial evidence of willfulness, including sustained receipt of taxable income, failure to report it, and steps taken to keep proceeds off identifiable financial records.
- Sentencing courts must make specific, reviewable factual findings to support tax-loss calculations and guideline enhancements; conclusory adoption of presentence reports is insufficient when the basis is disputed or unclear.

## Conclusion

The Third Circuit sustained the defendants’ Klein conspiracy and tax convictions because the record supported an inference that avoiding IRS detection was part of the scheme, but it required resentencing where the district court did not provide an adequate factual basis for tax loss and certain guideline enhancements.


United States v. Gricco, 277 F.3d 339 (3d Cir. 2002)