UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF VIRGINIA

LYNCHBURG DIVISION

UNITED STATES OF AMERICA )

)
v. ) Criminal No. 6:17-CR-0003-01
)
BARRY EDWARDS, )
Defendant. )

UNITED STATES’ SUPPLEMENTAL SENTENCING MEMORANDUM

Barry Edwards and his wife created two purported religious missions, For His Glory

Mission (“FHG Mission”) and Helping Hands Mission (“HH Mission”), to evade their federal

income tax obligations. The Edwardses failed to file any tax returns on behalf of FHG Mission

and HH Mission, and they also failed to file U.S. Individual Income Tax Returns, Forms 1040,

for tax years 2005 through 2012 despite earning gross income in amounts far exceeding the

threshold filing requirements.

Barry and Joanne Edwards opened bank accounts in the names of these “missions” and

deposited the income that Barry Edwards earned selling nutritional supplements into those

accounts. The Edwardses withdrew more than $475,000 in cash from the missions’ bank

accounts, in increments less than $10,000, to evade bank-reporting requirements. They deposited

the funds into their personal bank accounts, and used the money to pay personal expenses

including their car payments, children’s tuition, and to purchase a five-acre farm in Concord,

Virginia.

After multiple contacts with the Internal Revenue Service (“IRS”) between June 2013

and March 2014, the Edwardses finally resumed filing their individual tax returns in January

2015. However, the Edwardses’ tax returns for tax years 2013, 2014, and 2015 fraudulently

 
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underreported their total income for each tax year, including Form 1099 income from the sales of

nutritional supplements.

As part of the Edwardses’ plea negotiations, Barry Edwards stipulated to a two-level

aggravating role enhancement in exchange for a two-level mitigating role reduction for Joanne

Edwards. The government agreed to this stipulation because it was consistent with the United

States’ view of each defendant’s relative culpability for the scheme. In short, Joanne Edwards

did what Barry Edwards told her to do. The scheme was Barry Edwards’ brainchild, and he gave

the orders with regard to its execution.

The Court sentenced Joanne Edwards to 18 months in prison for her role in the couple’s

scheme. On the grounds set forth below, the United States respectfully requests a within-

Guidelines sentence of 36 months for Barry Edwards.

FACTS

On March 23, 2017, a federal grand jury in the Western District of Virginia returned an

Indictment charging Barry Edwards with corruptly endeavoring to obstruct the Internal Revenue

Code, in violation of 26 U.S.C. § 7212(a) (Count One), and income tax evasion, in violation of

26 U.S.C. § 7201 (Counts Two through Four). The Indictment also charged Barry and Joanne

Edwards with conspiring to structure currency transactions, in violation of 18 U.S.C. § 371

(Count Five), and filing false tax returns for tax years 2013 and 2014, in violation of 26 U.S.C. §

7206(1) (Counts Six and Seven). The Edwardses were arrested on April 12, 2017, and they have

each since pleaded guilty. Barry Edwards pleaded guilty to Counts Five and Six of the

Indictment.

The United States filed with the Court the factual basis for Barry Edwards’ guilty plea

(Dkt. No. 42), which was adopted in the Presentence Investigation Report and which is

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incorporated by reference into this sentencing memorandum. Below are additional facts that the

United States asks the Court to consider as it determines the appropriate sentence for Barry

Edwards.

Barry Edwards Created and Used Nominee Entities to Evade the Couples’ Tax
Obligations

Barry Edwards established FHG Mission in May 2006. Three months later, Barry

Edwards instructed Joanne Edwards to establish HH Mission. Both FHG Mission and HH

Mission purported to be Lynchburg, Virginia, missions of the Church of Yahweh, a non-

denominational church headquartered in Florida; however, in practice, neither mission served

any religious or charitable purpose. Instead, Barry and Joanne Edwards simply used the missions

as nominee entities for the purpose of receiving income that Barry Edwards earned as an

independent contractor for Eniva, USA., Inc., a health and wellness business, and as an

independent sales representative for Max International, a health supplements business.

Barry Edwards Signed False Federal Tax Returns after Meeting with the IRS

The IRS and Virginia State Police first contacted the Edwardses about their purported

religious missions on June 21, 2013. Barry and Joanne Edwards admitted during that interview

that the money that flowed into the HH Mission and FHG Mission accounts were personal funds.

At the end of the interview, the IRS case agent served the Edwardses with copies of letters

informing them that they were targets of a criminal investigation. The Edwardses had at least

four additional contacts with the IRS between June 2013 and March 28, 2014, when each of

them sat for a proffer with the IRS and Assistant U.S. Attorneys.

Despite knowing that he was under investigation by the IRS regarding taxes due and

owing, and while in active negotiations with the government regarding the possibility of a pre-

indictment resolution, in January 2015, Barry Edwards signed and filed with the IRS false tax

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returns for tax years 2013, 2014, and 2015 that underreported the total income the couple had

earned each year. Almost all of the unreported income in these years was money that Barry

Edwards earned through his supplement sales business.

Tax Loss Calculation

The United States calculated the combined tax loss arising from Barry Edwards’ conduct

for tax years 2006 through 2015 to be approximately $318,008 as follows:

Year Corrected Corrected Tax Self- Total Amount

Taxable Income Due and Owing Employment Due and Owing
Tax
2006 $170,771.00 $46,395.00 $17,678.00 $64,073.00
2007 $155,352.00 $40,866.00 $17,497.00 $58,363.00
2008 $64,627.00 $12,500.00 $15,736.00 $28,236.00
2009 $196,594.00 $54,720.00 $20,033.00 $74,753.00
2010 $126,198.00 $32,136.00 $17,923.00 $50,059.00
2011 $54,671.00 $9,744.00 $9,664.00 $19,408.00
2012 $76,788.00 $8,297.00 $4,512.00 $12,809.00
2013 $16,301.00 $1,633.00 $3,838.00 $7,929.00
2014 $2,742.00 $0.00 $932.00 $2,024.00
2015 ($1,880.00) $64.00 $290.00 $354.00
TOTAL: $318,008.00

This calculation excludes an additional $155,403.05 in penalties and interest that accrued

through August 16, 2017.1 Barry Edwards has not stipulated to the government’s precise loss

calculation, but he has agreed that the tax loss in this case is more than $250,000.

CALCULATION OF THE APPLICABLE SENTENCING GUIDELINES RANGE

The United States reviewed the revised Presentence Investigation Report for Barry

Edwards, and it agrees with U.S. Probation’s calculation of the advisory Sentencing Guidelines

range. Counts 5 and 6 against Barry Edwards are properly grouped under U.S.S.G. § 3D1.2(d).

Applying U.S.S.G. §§ 2T1.1 and 2T4.1, Barry Edwards’ base offense level is 18. He is subject to

1
Dkt. No. 55-1 (Gov’t Ex. 1).

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a two-level enhancement because his offense involved the use of sophisticated means (i.e.,

forming purported religious missions to conceal his income) under U.S.S.G. § 2T1.1(b)(2), and

Barry Edwards has stipulated to a two-level role enhancement under U.S.S.G. § 3B1.1(c) as the

leader of the scheme between he and his wife. Barry Edwards is eligible for a three-level

decrease in his total offense level for acceptance of responsibility under U.S.S.G. §§ 3E1.1(a)

and (b). Assuming that the Court finds that Barry Edwards falls within Criminal History

Category I, a total offense level of 19 corresponds to a Sentencing Guidelines range of 30 to 37

months imprisonment.

THE IMPORTANCE OF DETERRENCE IN TAX CASES

The need for deterrence, both general and specific, is critical in tax cases. In a trio of

opinions issued in 2010, the Fourth Circuit made it clear that deterrence in tax cases is

effectuated through sentences resulting in imprisonment.2 Sentences within the advisory

Guidelines remind citizens that there are consequences to evading their federal tax obligations,

and that those who steal from the U.S. Treasury and obstruct the IRS’s collection efforts will

suffer swift and just punishment.

General deterrence is an essential means of minimizing the ever-increasing amount of

money estimated to be lost each year through tax fraud. The United States tax system relies on

voluntary compliance. IRS studies have estimated that only 81.7% of individuals are compliant,

leaving a yearly tax gap of over $406 billion dollars in unreported and uncollected taxes.3

According to Joshua Blank, Associate Professor of the Practice of Tax Law and Faculty Director

2
United States v. Engle, 592 F.3d 495, 502 (4th Cir. 2010); United States v. Baucom, 360 F.
App’x. 457, 464-65 (4th Cir. 2010); United States v. Morace, 594 F.3d 340, 349 (4th Cir. 2010).
3
See IRS’s “Tax Gap Estimates for Tax Years 2008 – 2010” https://www.irs.gov/uac/the-tax-
gap; see also United States v. Gardellini, 545 F.3d 1089, 1097 (D.C. Cir. 2008).

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of the Graduate Tax Program, New York University School of Law, “[s]tudies have shown that

salient examples of tax-enforcement actions against specific taxpayers, especially those that

involve criminal sanctions, have a significant and positive deterrent effect.”4 These studies

emphasize the impact that noncompliance with the tax code has on the U.S. Treasury and the

deterrent impact prison sentences have on other potential tax scofflaws. Hundreds of billions of

dollars are lost annually because people like Barry Edwards choose to shirk their responsibilities

as American taxpayers.

At the same time, the significant resources required to mount a criminal tax prosecution

results in relatively few criminal tax prosecutions each year.5 The introductory commentary to

the section of the Guidelines dealing with tax crimes notes that, “[b]ecause of the limited number

of criminal tax prosecutions relative to the estimated incidence of such violations, deterring

others from violating the tax laws is a primary consideration underlying these guidelines.”6

Where the incidence of prosecution is lower, the level of punishment must be higher to obtain

the same level of deterrence.7

In short, widespread noncompliance with the Internal Revenue Code is an ongoing

problem that merits every court’s consideration when sentencing defendants for committing tax

4
Joshua D. Blank, In Defense of Individual Tax Privacy, 61 Emory L.J. 265, 322 (2011-12).
5
According to U.S. Sentencing Commission statistics published September 2017
(http://www.ussc.gov/research/quick-facts/tax-fraud), in fiscal year 2016 there were only 584 tax
fraud offenders sentenced nationwide. This represents only one percent of all federal offenders in
fiscal year 2016, and 64 fewer tax offenders than were sentenced in fiscal year 2015.
6
U.S.S.G. Part 2T1 (Introductory Commentary).
7
See generally, Louis Kaplow and Steven Shavell, Fairness Versus Welfare, 114 Harv. L. Rev.
961, 1225-1303 (2001).

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offenses. This is even more important in cases involving taxpayers who leverage fraudulent tax

schemes such as using fake religious missions to evade paying their taxes.

The government cannot ensure compliance with the Internal Revenue Code if the general

public believes there are no repercussions for failing to comply with the tax laws and regulations.

Sentencing Barry Edwards each to a term of incarceration will send a message to others that any

systematic effort to cheat on one’s taxes will be met with harsh punishment.

Finally, although specific deterrence is a secondary consideration to general deterrence, a

sentence within the advisory Guidelines will serve as a stinging reminder to Barry Edwards that

he must file annually true and accurate federal tax returns in the future.

ADDITIONAL 18 U.S.C. § 3553(a) FACTORS

Section 3553(a) provides that the sentencing “court shall impose a sentence sufficient,

but not greater than necessary, to comply with the purposes set forth in paragraph (2) of this

subsection,” and sets forth several considerations in addition to the need for general and specific

deterrence. 18 U.S.C. § 3553(a). These factors, applied in this case, suggest a sentence for Barry

Edwards at the top of the applicable advisory Guidelines range is warranted here.

Nature and Circumstances of the Offense; Seriousness of the Offense

As described above, Barry Edwards’ crimes were serious ones. He stole over $318,000

from the U.S. Treasury by evading the assessment and payment of his federal income taxes.

There is no evidence to suggest that the defendant’s criminal conduct was borne out of necessity.

Barry Edwards was a successful salesman who earned enough money to support his family. In

short, there is nothing about the nature and circumstances of his crimes that warrant a downward

departure or variance from the Sentencing Guidelines. Indeed, Barry Edwards’ role as leader of

this scheme warrants a sentence at the top of the applicable Guidelines range.

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 At his wife’s sentencing, Barry Edwards testified to the following:

“[M]y wife basically did what I asked her to do. I’m the one that sought out and read the
tax laws and tax codes. I’m the person that, you know, gave them to me. My wife
basically only did what I asked her to do, and that’s a true statement, Your Honor. And I
would just cry out for mercy and grace for my wife this morning. I'm willing to take full
responsibility for everything.”8

As the Court noted in fashioning a just and reasonable sentence for Joanne Edwards,9 Barry

Edwards is not permitted to “take on” punishment for his wife in exchange for leniency for her.

However, the Court can and should consider Barry Edwards’ overall role in the scheme as part of

the 18 U.S.C. § 3553(a) factors.

The fact is that the Edwardses only embarked on this scheme because Barry Edwards

chose to pursue it, and his wife likely would not have committed the crimes she committed if she

had not followed her husband’s directions. In some ways, Joanne Edwards was another victim of

Barry Edwards’ quest to avoid paying his fair share of federal income taxes. The United States

respectfully submits that Barry Edwards is twice is a guilty as his wife, and therefore deserves

twice the sentence that she received from the Court.

History and Characteristics of the Defendant

Nothing disclosed by the Presentence Investigation Report with respect to Barry

Edwards’ personal history or characteristics warrants a departure or variance from the

Sentencing Guidelines. For example, he does not have a recent history of drug or alcohol abuse

or recent criminal convictions. However, these facts are already accounted for by the Criminal

History Category calculated under the Sentencing Guidelines.

8
D094 (Transcript of May 9, 2018 Sentencing of Joanne Edwards), p. 4, ln. 13-19.
9
Id., p. 13, ln. 1 – 15.
8

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 The Need to Provide Just Punishment and Promote Respect for the Law

Section 3553(a) states that “[t]he court shall impose a sentence sufficient, but not greater

than necessary, to comply with the purposes” of sentencing. 18 U.S.C. § 3553(a). Application of

the phrase “sufficient, but not greater than necessary” to a particular defendant’s situation does

not produce one single “correct” term of imprisonment, nor mandate a rule that a defendant

should be sentenced at the bottom of a calculated range. That conclusion follows from the

interdependence of a district courts’ obligation to impose a sentence that is “sufficient, but not

greater than necessary,” and an appellate court’s obligation to review sentences for

reasonableness. Just as “reasonableness” is a range, not a single point,10 so is a sentence that is

“sufficient, but not greater than necessary.”

The United States submits that the importance of deterrence in this case, coupled with the

years of tax defiance committed by Barry Edwards, warrants a sentence within the applicable

Sentencing Guidelines ranges.

Restitution

Finally, the United States respectfully requests that the Court an issue order of restitution

against Barry Edwards as part of the conditions of supervised release. The United States asks for

an order of restitution against Barry Edwards in the amount of $7,929, the tax loss for tax year

2013.

[THIS SPACE INTENTIONALLY LEFT BLANK]

10
United States v. Cunningham, 429 F.3d 673, 679 (7th Cir. 2005).

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 CONCLUSION

Based on the arguments above, the United States respectfully requests that the Court

sentence Barry Edwards to a term of imprisonment of at least 36 months.

Respectfully submitted

RICHARD E. ZUCKERMAN
PRINCIPAL DEPUTY ASSISTANT ATTORNEY GENERAL

Sean Beaty, Trial Attorney

U.S. Department of Justice, Tax Division
Southern Criminal Enforcement Section
601 D St., NW, Seventh Floor
Washington, DC 20579
(202) 616-2717 (direct)
(202) 514-0961 (facsimile)
Sean.P.Beaty@usdoj.gov

Kari Munro
Assistant United States Attorney
Western District of Virginia
310 First Street SW
Roanoke, VA 24011
(540) 857-2250 (main)
(540) 857-2179 (facsimile)
Kari.Munro@usdoj.gov

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing instrument was
electronically filed with the Clerk of the Court using the CM/ECF System, which will transmit
notification of such filing to counsel for all parties.

s/ Sean Beaty
Sean Beaty, Trial Attorney
10

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