UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TENNESSEE AT KNOXVILLE UNITED STATES OF AMERICA No. v. JUDGE CHARLES MARSHALL STIVERS PLEA AGREEMENT The United States of America, by the United States Attorney for the Eastern District of Tennessee, and the defendant, Charles Marshall Stivers and the defendant?s attorney, Stephen Ross Johnson, have agreed upon the following: 1. The defendant will waive indictment and arraignment and plead guilty to an Information charging the defendant with the following offense: a) Count one, conspiracy to defraud the United States, in Violation of 18 U.S.C. ?3 7 1 . The punishment for this offense is as follows: up to five (5) years imprisonment, a ?ne of not more than $250,000, not more than three (3) years supervised release, and a mandatory assessment of $100, in addition to any applicable forfeiture and restitution. 2. The United States agrees not to further prosecute the defendant in the Eastern District of Tennessee or the Eastern District of Kentucky for any other criminal offenses committed by the defendant that are known to the United States Attorneys? Of?ces for the Eastern District of Tennessee and the Eastern District of Kentucky at the time of the execution of this plea agreement. 3. The defendant has read the information, discussed the charges and possible defenses with defense counsel, and understands the crime charged. The defendant is pleading guilty because Case Document 4 Filed 04/08/15 Page 1 of 10 PageID 9 the defendant is in fact guilty. In order to be guilty, the defendant agrees that each of the following elements of the crime must be proved beyond a reasonable doubt: a) The existence of an agreement by two or more persons to commit an offense against the United States or defraud the United States; b) The defendant?s knowing and voluntary participation in the conspiracy; and c) The commission of an overt act in furtherance of the conspiracy. 4. In support of the defendant?s guilty plea, the defendant agrees and stipulates to the following facts, which satisfy the offense elements. These are the facts submitted for purposes of the defendant?s guilty plea. They do not necessarily constitute all of the facts in the case. Other facts may be relevant to sentencing. Both the defendant and the United States retain the right to present additional facts to the Court to ensure a fair and appropriate sentence in this case. The defendant works as a Certified Public Accountant (CPA) in Manchester, Kentucky. He has been a CPA since 1989. In his capacity as a CPA he performed tax preparation services for an elected official, a resident of Knox County, Tennessee. The elected official serves in the Tennessee General Assembly. The elected official approached the defendant in late 2006 or early 2007 and explained to him that he planned to purchase a large quantity of cigarette tax stamps from a friend who operated a wholesale cigarette distribution company, Tru Wholesale (TW). The elected of?cial explained that the State of Tennessee was going to pass a new law which would increase the cigarette tax stamp from $0.20 to $0.60 per stamp. The elected official stated he had an agreement with TW to purchase the cigarette tax stamps from TW at the $0.20 tax rate and then wait until after the law was enacted to sell the cigarette tax stamps at the new higher tax rate of $0.60. Ultimately, the tax was increased to $0.62. The elected of?cial asked the defendant if he wanted to be an investor in the Case Document 4 Filed 04/08/15 Page 2 of 10 PageID 10 scheme. The defendant declined, but was then asked by the elected of?cial for a loan to purchase the tax stamps. The elected of?cial requested a loan of approximately $250,000 from the defendant. The defendant refused to loan him the money but suggested that the elected of?cial borrow the money from a local bank. The defendant knew the elected of?cial was on the board of directors at a local bank and believed the elected of?cial would be able to secure a loan easily based on his relationship with the bank. After the elected of?cial secured the loan from the local bank, he approached the defendant again for assistance in concealing the proceeds he would receive from the cigarette tax stamp scheme. The elected of?cial asked the defendant if he could ?run? the money through the defendant?s business. The elected of?cial stated he did not want his wife or anyone else to know that he was receiving money from TW. The elected of?cial stated he was a member of a sub- committee of the General Assembly that approved the cigarette tax stamp legislation to be voted on by entire General Assembly. The elected of?cial further stated he had voted to pass the law during the General Assembly vote and that he did not want his name on a check from a tobacco company since he had voted in favor of the cigarette tax stamp increase. The defendant agreed to assist the elected of?cial in the scheme. The agreement was that the defendant would accept and deposit the cigarette tax stamp money from TW into his First National Bank of Manchester, Bowling Branch Investments, lnc. (BBI) bank account. The defendant would then distribute the elected of?cial?s pro?t by writing checks to the elected of?cial from the BB1 bank account. The elected of?cial offered the defendant a portion of the pro?ts he received from TW. The defendant and the elected of?cial agreed the defendant?s portion would be 15% of the pro?ts. It was also agreed that the defendant would not receive any money until the elected of?cial Case Document 4 Filed 04/08/15 Page 3 of 10 PageID 11 paid off the loan from the local bank. The defendant asked the elected of?cial if he wanted to pay income taxes on the money. The elected of?cial stated, ?Nowith all of this that would be great.? The elected of?cial invested $250,000 into the purchase of the tax stamps and sold them for $750,000 creating a pro?t of approximately $500,000. The defendant did not include the pro?ts from the cigarette tax avoidance scheme on the elected of?cial's 2008 federal income tax return when he prepared it, knowing it was taxable income. Additionally, he created a ?ctitious note in his computer ?les that stated that all of the proceeds the elected of?cial received from the cigarette tax scheme were for the repayment of a loan. The defendant and the elected of?cial knew this note was untrue, but included it in his computer files to conceal his participation in the tax scheme in case anyone ever questioned the defendant or the elected official about the transactions. When originally questioned by law enforcement on October 31, 2013, about this scheme, the defendant provided a copy of the original computer note. He also created and provided to law enforcement what purported to be a handwritten note dated October 2009 that corroborated the note he originally entered into his computer ?les. Subsequently, the defendant admitted to law enforcement that he created the handwritten note after his first interview by law enforcement on October 31, 2013, but dated the note October 2009. The defendant created the handwritten note in an attempt to support the statements he made to the interviewing agents and make him appear more convincing. The defendant was further interviewed regarding his involvement in the tax avoidance scheme with the elected of?cial. He stated that at the time he agreed to participate in this scheme with the elected official he knew it was illegal and that the elected official knew it was illegal as well. Case Document 4 Filed 04/08/15 Page 4 of 10 PageID 12 The parties agree that for the purposes of sentencing the defendant will be held, pursuant to USSG to a tax loss of less than $200,000 and that USSG ??3Bl.3 and 3C1.l do not apply. 5. The defendant understands that by pleading guilty the defendant is giving up several rights, including: a) the right to be indicted by a grand jury for these crimes; b) the right to plead not guilty; 0) the right to a Speedy and public trial by jury; d) the right to assistance of counsel at trial; e) the right to be presumed innocent and to have the burden of proof placed on the United States to prove the defendant guilty beyond a reasonable doubt; f) the right to confront and cross-examine witnesses against the defendant; g) the right to testify on one?s own behalf, to present evidence in opposition to the charges and to compel the attendance of witnesses; and h) the right not to testify and to have that choice not used against the defendant. 6. The parties agree that the appropriate disposition of this case would be the following as to each count: a) The Court may impose any lawful term of imprisonment, any lawful ?ne, and any lawful term of supervised release up to the statutory maximum; b) The Court will impose special assessment fees as required by law; and c) The Court may order forfeiture as applicable and restitution as appropriate. No promises have been made by any representative of the United States to the defendant as to what the sentence will be in this case. Any estimates or predictions made to the defendant by defense Case Document 4 Filed 04/08/15 Page 5 of 10 PageID 13 counsel or any other person regarding any potential sentence in this case are not binding on the Court, and may not be used as a basis to rescind this plea agreement or withdraw the defendant?s guilty plea. The defendant understands that the sentence in this case will be determined by the Court after it receives the presentence report from the United States Probation Of?ce and any information presented by the parties. The defendant acknowledges that the sentencing determination will be based upon the entire scope of the defendant?s criminal conduct, the defendant?s criminal history, and pursuant to other factors and guidelines as set forth in the Sentencing Guidelines and the factors set forth in 18 U.S.C. 3553. 7. If the Court orders the defendant to pay restitution to the IRS for the failure to pay tax, either directly as part of the sentence or as a condition of supervised release, the IRS will use the restitution order as the basis for a civil assessment. See 26 U.S.C. 6201(a)(4). The defendant does not have the right to challenge the amount of this assessment. See 26 U.S.C. 6201(a)(4)(C). Neither the existence of a restitution payment schedule nor the defendant?s timely payment of restitution according to that schedule will preclude the IRS from administrative collection of the restitution-based assessment, including levy and distraint under 26 U.S.C. 6331. 8. Given the defendant?s agreement to plead guilty, the United States will not oppose a two-level reduction for acceptance of responsibility under the provisions of Section 3El.l(a) of the Sentencing Guidelines. Further, if the defendant?s offense level is 16 or greater, and the defendant is awarded the two?level reduction pursuant to Section the United States agrees to move, at or before the time of sentencing, the Court to decrease the offense level by one additional level pursuant to Section 3El.l(b) of the Sentencing Guidelines. Should the defendant engage in any conduct or make any statements that are inconsistent with accepting responsibility for the defendant?s offense, including violations of conditions of release or the commission of additional Case Document 4 Filed 04/08/15 Page 6 of 10 PageID 14 offenses prior to sentencing, the United States will be free not to make such motion or to withdraw such motion if already made, and will be free to recommend to the Court that the defendant not receive any offense level reduction for acceptance of responsibility under Section 3E1.1 of the Sentencing Guidelines. 9. The defendant agrees to pay the special assessment in this case prior to sentencing. 10. The defendant agrees that the court shall order restitution, pursuant to any applicable provision of law, for any loss caused to: (1) the Victim of any offense charged in this case (including dismissed counts); and (2) the Victim of any criminal activity that was part of the same course of conduct or common scheme or plan as the defendant?s charged offense. 11. Financial Obligations. The defendant agrees to pay all fines and restitution imposed by the Court to the Clerk of Court. The defendant also agrees that the full ?ne and/or restitution amount shall be considered due and payable immediately. If the defendant cannot pay the full amount immediately and is placed in custody or under the supervision of the Probation Office at any time, the defendant agrees that the Bureau of Prisons and the Probation Of?ce will have the authority to establish payment schedules to ensure payment of the ?ne and/or restitution. The defendant further agrees to c00perate fully in efforts to collect any ?nancial obligation imposed by the Court by set-off of federal payments, execution on non-exempt prOperty, and any other means the United States deems appropriate. The defendant and counsel also agree that the defendant may be contacted post-judgment regarding the coilection of any ?nancial obligation imposed by the Court without notifying the defendant?s counsel and outside the presence of the defendant?s counsel. In order to facilitate the collection of ?nancial obligations to be imposed with this prosecution, the defendant agrees to disclose fully all assets in which the defendant has any interest or over which the defendant exercises control, directly or indirectly, including those held by a spouse, nominee, or Case Document 4 Filed 04/08/15 Page 7 of 10 PageID 15 other third party. In furtherance of this agreement, the defendant additionally agrees to the following speci?c terms and conditions: a) If so requested by the United States, the defendant will submit a completed ?nancial statement to the U.S. Attorney?s Of?ce, in a form it provides and as it directs. The defendant promises that such ?nancial statement and disclosures will be complete, accurate, and truthful. b) The defendant expressly authorizes the U.S. Attomey?s Of?ce to obtain a credit report on the defendant in order to evaluate the defendant?s ability to satisfy any ?nancial obligation imposed by the Court. c) if so requested by the United States, the defendant will execute authorizations on forms provided by the U.S. Attorney?s of?ce to permit the U.S. Attorney?s Of?ce to obtain ?nancial and tax records of the defendant. 12. a) In consideration of the concessions made by the United States in this agreement and as a further demonstration of the defendant?s acceptance of responsibility for the offense committed, the defendant agrees not to ?le a direct appeal of the defendant?s conviction or sentence except the defendant retains the right to appeal a sentence imposed above the sentencing guideline range determined by the district court or above any mandatory minimum sentence deemed applicable by the district court, whichever is greater. b) In addition, the defendant knowingly and voluntarily waives the right to file any motions or pleadings pursuant to 28 U.S.C. 2255 or to collaterally attack the defendant?s conviction and/or resulting sentence. The parties agree that the defendant retains the right to raise, by way of collateral review under 2255, claims of ineffective assistance of counsel or prosecutorial misconduct not known to the defendant by the time of the entry of judgment. Case Document 4 Filed 04/08/15 Page 8 of 10 PageID 16 13. This agreement becomes effective once it is signed by the parties and is not contingent on the defendant?s entry of a guilty plea. If the United States violates the terms of this agreement, the defendant will have the right to withdraw from this agreement. If the defendant violates the terms of this agreement in any way (including but not limited to failing to enter guilty plea(s) as agreed herein, moving to withdraw guilty plea(s) after entry, or by violating any court order or any local, state or federal law pending the resolution of this case), then the United States will have the right to void any or all parts of the agreement and may also enforce whatever parts of the agreement it chooses. In addition, the United States may prosecute the defendant for any and all federal crimes that the defendant committed related to this case, including any charges that were dismissed and any other charges which the United States agreed not to pursue. The defendant expressly waives any statute of limitations defense and any constitutional or speedy trial or double jeopardy defense to such a prosecution. The defendant also understands that a violation of this plea agreement by the defendant does not entitle the defendant to withdraw the defendant?s guilty plea(s) in this case. 14. The United States will file a Supplement in this case, as is routinely done in every case, even though there may or may not be any additional terms. If additional terms are included in the Supplement, they are hereby fully incorporated herein. 15. This plea agreement and supplement constitute the ?lil and complete agreement and understanding between the parties concerning the defendant?s guilty plea to the above-referenced charge, and there are no other agreements, promises, undertakings, or understandings between the defendant and the United States. The parties understand and agree that the terms of this plea agreement can be modi?ed only in writing signed by all of the parties and that any and all other Case Document 4 Filed 04/08/15 Page 9 of 10 PageID 17 promises, representations, and statements whether made before, contemporaneous with, or after this agreement, are null and void. WILLIAM C. KILLIAN UNITED STATES ATTORNEY ".710 c/ By: 4 2. a. a. Date Charles E.Atch1ey,Jr. Assistant United States Attorney (Date Charles Marshall Stivers Defendant .- dig: . Emma -- . . \n 7 1 37d} 4 v.55: mf/chJca/Km? Date Step? Ross Johnson Atto ey for the Defendant 10 Case Document 4 Filed 04/08/15 Page 10 of 10 PageID 18